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FM Frequency: Get The Most From Vendors Through Value Improvement Planning

Written by Retired Columnist. Posted in Columnists, FM Frequency, Magazine, Retired Columnists

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Published on March 01, 2005 with No Comments

By Jeff Crane, P.E., LEED® AP

Published in the March 2005 issue of Today’s Facility Manager

Whether you’re a facility management rookie or a seasoned veteran in the field, you’ve probably noticed that your team’s success is often directly related to the performance of contracted service providers. Cleaning, landscaping, security, mail room, food service, maintenance, and construction are just a few of the many services facilities professionals frequently outsource. And let’s face it-when these folks do a great job, it makes everyone look good. When they don’t perform, well, you know what happens.

When it comes to outsourcing providers, it’s important to re-examine what’s going on periodically. Take a reality check right now. Do you conduct account reviews on a regular basis? Are you getting the full value from your suppliers’ industry expertise? Are you getting the level of services you expect? Have industry practices, technology, or costs changed since you established services? Do you know how contractors’ services compare to their competitors? Are you a good customer? Are you willing to write letters of recommendation or offer references for your suppliers? Is there anything you could do to improve your relationships with suppliers? Do you recognize excellent performance and offer constructive criticism when improvements are needed? Do you ignore your supplier relationships until there is a crisis?

If you’re not pleased with the answers you’ve given, a tune-up is probably in order. Value Improvement Planning (VIP) programs offer an opportunity for suppliers to set themselves apart from their competition and confirm they are meeting or exceeding expectations. This program includes periodic account reviews and requires the supplier to submit a written VIP submittal. Since suppliers are considered experts in their respective fields, the written VIP should include proactive suggestions for operational efficiency enhancements, cost reductions, or other value improvement opportunities that might be obtained through creative problem solving, new technologies, or scope of work adjustments.

More specifically, the plan should include the following components (at the very least):

  • Summary information describing the products and/or services currently provided by the vendor; how long that vendor has been a supplier; date of prior account review; and current contact information (sales, customer service, technical support, etc.).
  • Approximate dollar volume of business conducted between you and the vendor over the past six month, one year, and three year periods.
  • Supporting information and details about the value of the contractor’s products and/or services. For instance, why do you work with this company instead of its competitors?
  • What aspects of the vendor/client relationship could use improvement (on the part of both parties)?
  • How should you quantify the vendor’s performance (looking for specific metrics such as number of callbacks, labor hours, complaints, inspection scores, etc.)?
  • What specific steps could improve the value of the relationship (lower cost options, electronic ordering/invoicing/payments, scope of work change suggestion)? What would this mean to you as the customer (how much money could you save, how much time would implementation require, etc.)?
  • When does the vendor want to meet to review the implementation progress and effects of recommendations made?
  • On a scale of one to 10 (10 being best), how does your vendor rank its performance since your last account review? Why? What performance rating does the vendor expect to achieve at the next account review? Will improvement recommendations address everything necessary to reach that level?
  • On the same scale, how do you rank yourself as a customer since the last account review? Why?
  • Additional thoughts or comments?

As the customer, you should have some very specific procurement guiding principles. Here is a brief list of considerations that will help you do your part to maintain healthy vendor/client relationships.

  • Maintain the highest standards of ethical behavior while respecting professional relationship integrity.
  • Do not offer or accept gifts or favors that could influence purchasing decisions.
  • Obtain competitive pricing based on a level playing field while avoiding agreements that restrain competition.
  • Maintain strict confidentiality regarding volume, pricing, and terms.
  • Make procurement decisions based on a cost sensitive value analysis-not simply low bid.
  • Collaborate to generate win/win opportunities, helping all parties succeed in a competitive marketplace.

Speaking of win/win relationships, I look forward to seeing all of you at The TFM Show® in Chicago this April. In addition to meeting suppliers and seeing new products at the exhibition area, the show is also a great opportunity to network and meet other people who do what we do.

If you’ve ever talked about the details of our business with friends or family members and noticed their eyes glazing over, you would probably enjoy spending time with folks who can truly appreciate our daily challenges. It’s always better to share good shop stories with folks who have similar experiences.

And for anyone interested in the educational sessions, be forewarned! I’m restlessly contemplating how to spend an hour discussing a couple of my favorite topics-heating, ventilating, and air conditioning (HVAC) and indoor air quality (IAQ). This will be my first experience as a presenter, and I confess, I’m a bit anxious about doing a good job. While it’s become a little easier to figure out how to place 800 to 1,000 words on paper each month, planning a presentation is a lot more challenging. As we know, live events don’t feature “undo” or “edit” keys.

If budget or time constraints prevent you from making it to Chicago this year, you should seriously consider planning (and budgeting) to attend next year’s event, again slated for Chicago. I hope to see you soon in the Windy City!

Crane is a mechanical engineer and regional property manager with Childress Klein Properties, a leading real estate developer and property management services provider in the Southeast.

About Retired Columnist

This expert formerly served as regular contributor to Today’s Facility Manager magazine. His vast knowledge of the facility management profession continues to provide a rich resource for facility managers by way of this online archive.

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