As any technician or cleaner will tell you, there are two essentials for ensuring a job gets done correctly and on time.
One of course is having the right set of skills, training and certifications on hand. Equally as important, however, is making sure you have the proper tools and parts at the very moment you need them. Falling under the realm of supply chain management and procurement, it is a critical aspect of FM that can’t be done without, but one that is considerably difficult to get just right.
Enter 36 Strategies, a procurement specialist firm that has since its inception in 2012, fostered a stellar reputation amongst the region’s integrated facilities management (IFM) firms. From its offices in Dubai and Muscat, 36 Strategies works with a number of prominent IFM providers, which include the likes of Emrill, QBG Facilities Management, Farnek and Cofely Besix Facility Management (CBFM).
“We work with companies to analyse their procurement. From the moment they decide to make a purchase, all the way through to when they pay their suppliers, we look at optimising that process, to create value—determined in their eyes by what they believe adds value to their company,” beams Steven Speter, managing director of 36 Strategies.
Right from the get-go, 36 Strategies offers prospective clients a range of consultancy services, which include optimisation of the procure-to-pay and supply chain processes, as well as catalogue management. Analysing an end-user’s procurement hierarchy, 36 Strategies’ team of Sigma-Six certified process experts help to analyse and propose plans to help streamline the process and realise savings.
The core of the company’s success however, lies with its e-procurement platform Insight. The cloud-based system enables customers to conduct and complete its purchase orders, internal approvals and communication exchange with suppliers, all through a single interface. Accessible with mobile devices, Insight is equipped with a number of budgeting and reporting features. According to 36 Strategies’ managing director, the whole process from order to approval can take a mere 37 minutes to complete.
“We built a procure-to-pay system in-house. We’ve taken the commonly used process of raising an logistics performance index (LPI) and paying supplies, and have actually taken a far more consumer-like approach,” explains Speter.
The 2014 fiscal year proved to be a fruitful one for the procurement specialist firm, reporting an impressive 320% growth in revenues. Furthermore, the company’s supply division, which stores around 4,500 FM-related products, as well as an additional 3,500 food products through its joint venture with general trading firm Four Corners, saw a 330% increase in deliveries over 2013. This equated to roughly 4,000 deliveries with a 99.8% delivery-on-time-full ratio. 36 Strategies was also recognised in fmME’s Top FM Suppliers in 2014.
Commenting on the company’s involvement on key projects in the UAE, Speter shared: “We deliver to about 80% of the towers in downtown and around 80% in Dubai Marina.”
One of the company’s most successful collaborations to date lies with its procurement partnership with QBG Facilities Management. An industry powerhouse, the IFM provider oversees a workforce of over 4,000 employees active on 400 contracts, 200 of which are based in region.
Prior to inking an agreement with 36S, QBG FM’s operations teams grappled to find the balance between time spent on procurement versus engaging clients and their respective demands.
“The time of the operations teams was eroded substantially due to unnecessary paperwork, speaking with suppliers, negotiations, the dreaded approval process and the many signatures required to simply purchase everyday parts,” explains Tony Martin, general manager, QBG FM.
Though the transition phase in bringing on-board 36 Strategies’ platform and associated practices was a laborious one, as the process demanded a change in viewpoints, the improvements are already being felt across the board. The operations teams in particular found that time lost on supply issues has been cut dramatically, freeing them to focus solely on the client and driving the company’s strategy.
“There was a major challenge in changing mind sets, and also much negotiation and meetings with 36 Strategies. But we have got there, the line has now been crossed and the service is rolling out across the entire business,” says Martin.
“The operations team can now focus on the delivery, and more importantly there aren’t 100 purchase orders circulating and awaiting approvals. The time from procurement to delivery has drastically reduced and this is appreciated by all.”
Whether from sheer stubbornness or unwillingness to break from familiarity, engaging positive organisational change in procurement practices is a constant challenge faced by 36 Strategies’ Speter and his team. One particularly difficult viewpoint that is difficult to break, is the idea that picking the ‘cheap’ alternative is the best way to save.
Focusing on buying low-priced products can potentially backfire, as the lack of quality often leads to more frequent purchases.
In the long-term, this will lead to raising more purchase orders. Rather the better approach is to look at the total cost of ownership of the product, which accounts for the lifecycle costs of the item.
“Just because you save a dirham when you buy the product now, actually, when you have to buy the product again in three months, then that saving is gone. It is a false saving, it was never actually real. The way that we look at things is the total cost of ownership from the entire process,” asserts Speter.
The managing director continues to point out that raising multiple orders throughout the year, each for a single item, is not economically sound. The better approach is to consolidate as many items as possible onto a single purchase order. This will optimise the process and likely reduce the total cost of ownership of individual products.
“If I can consolidate 7,500 purchase orders down into 3,000 purchase orders, the actual net savings for your organisation will far outweigh any small savings you have on your product,” explains Speter.
A copious amount of purchase orders also turns the entire process in an unruly beast that can be tricky to handle. As the numbers pile on, it becomes quite easy for section heads to lose track of inventory and specific orders, leading to duplicate products in the systems, overlapping requests and quite possibly, excess stock.
This had been the case with another one of 36 Strategies’ key clients, CBFM, who recently signed a contractual agreement to integrate with the firms’ Infinity platform and procurement services. Prior to 36 Strategies’ involvement, CBFM was challenged by the complex task of juggling multiple orders and supplies, to the point where it was affecting the business’ resources.
“We had too many suppliers for the same item on different contracts, delays in approval, delays in supply, too much stock stored on site, which affects cash flow, and were paying multiple suppliers each month,” explains Nicholas Powell, UAE country manager, CBFM.
Since coming on board, 36 Strategies has helped streamline the IFM’s procurement-to-pay process, enabling faster approval times, standardisation of materials and reducing the financial workload to a single detailed invoice each month.
“The new system allows us to go online and select what materials we require with picture references and add to our shopping cart for that contract. An email is sent to the contract manager to approve and delivery usually happens the next day,” comments Powell, who adds that the previous system was simply cumbersome and complex.
Another challenge that 36 Strategies often has to content with on new contracts is poorly implemented enterprise platforms. On the one hand, the managing director is quite positive about the uptake of technology in the GCC, viewing many firms to be motivated towards incorporating the latest and best in terms of platforms.
Following the integration process, however, a period which can take up to two years, some companies find that they have yet to realise the full benefits of the enterprise software. Using as little as 30% of the product’s features, the process becomes a costly endeavour. Coupled with producing bad data, it becomes an additional obstacle to tackle moving forward.
Lastly, another common issue that is prevalent across the market is the lack of expertise, training and even awareness of procurement.
Part of the issue stems from the novelty of the discipline, which Speter asserts is possibly only a decade old in the Middle East. Hailing from a background in traditional supply chain management, an arena that is itself roughly 20 years old, there is still a lot to learn in regards to the discipline.
“To become a well-rounded procurement specialist, you need about 15-20 years of experience. You need to work across multiple verticals,” asserts Speter.
“You need to actually go and do some time in a place like China, where things are being made, and understand how procurement works all the way back from the purchase of the raw material.”
Given time, however, the managing director is optimistic that the discipline will continue to mature, alongside the FM market. Looking ahead, Speter sees the trend in FM shifting towards consolidation in terms of core business and differentiating service offerings.
“The way that you buy the product, the way you get the product on to the client side, to me they don’t matter. The differentiator is how well you execute the service you’ve been deploying … to me that is FM and that is where companies will realise that’s where they need to put their time, effort and innovation,” explains Speter.