Insight

Facilities management (FM) service providers process millions of work orders a year for their customers. From a simple washer, battery, lamp or air filter through to a more complex expansion valve or new pump. Thousands of spare parts are needed at any one time to resolve a multitude of different issues and ensure buildings’ critical assets are kept up and running – and service providers meet their SLAs.

However, we conducted some independent research with some of the UK’s top FM service providers and consultants, which shows that spare parts management is an area of unnecessary, hidden cost and hassle for most FM firms.

Responsibility for the procurement and management of spares is decentralised. It typically sits with the contract or site manager, with little involvement from central procurement functions. The M&E teams buying and distributing spare parts have therefore tended to adopt practices that wouldn’t be acceptable in other parts of the business. And because it’s so specialist many procurement experts are reluctant to tackle the area.

At the same time, there is no standardised way of getting spare parts to engineers and most FM firms use a variety of different distribution methods depending on the site, the spare, the location and the client. As a result, engineers spend more time looking for spare parts rather than fixing plant and stock is often more costly than it needs to be.

And just as the procurement and distribution of spares is managed on a site-by-site, part-by-part basis, the management of stock levels is very much a local affair. While all FM firms have a CAFM system which has the functionality to manage inventory at site, client, regional and national level, many opt to use a site-by-site method to record this data. This varies from a physical checklist to an online spreadsheet. And this data is not regularly being recorded back onto the CAFM system.

Overall money is wasted and customers’ SLAs are missed incurring penalties. All of these issues led FM providers to give an average satisfaction rating for cost effectiveness of 6.4/10, one of the lowest score in our research, indicating the seriousness of the problem. With the UK FM market worth >£120bn[1], this is a significant problem.

At a time when margins are under extreme pressure, how do FM service providers balance the need to reduce the cost of managing spare parts while improving performance and boosting productivity?

The FM firms we spoke to for the report had five key recommendations, download the report to find out what they are.

[1] Figure regularly quoted by the Institute of Workplace and Facilities Management