The new facilities service model, and why it took so long
I was born in 1975 — pre-cable and pre-cartoon network. Tic-tac-toe, checkers and war were the games I played with adults. Alone — I stacked playing cards into big towers. 2 decks of cards, a chair, a pair of steady hands and I’d have a garage for my hot wheels cars.
My personal experience
For the last 6 years of my career, I’ve felt as though I was stacking more cards on top of a business model that was no longer working, and well on its way to irrelevance.
I’ve pitched facilities managers responsible for globally recognized brands and others less well known. I’ve created marketing content around idealism, Brand (the capital B is intentional) and my personal passions. NYC — SFO and middle Missouri, I’ve been across this country looking at scuffed walls, leaky roofs and tripping hazards — and it worked.
Going from $1 million to $10 million in revenue was fun.
$10 to $14 million was fun with problems.
Over $14 million was just problems.
Why? Something is broken.
[Pre 1997] The Supplier Model
Analog — A handful of companies providing single points of contact for buyers. Faxes, phone calls and Yellow Page Kung-Fu were the tools and the DNE’s were high. The primary competitive advantages for a supplier were legacy and information. Facility managers were at a disadvantage and often a significant data deficit as response and know-how were held tightly in the hand of the vendor. It was a common occurence for vendors to have work flow systems that surpassed those of the retailers; the side with the system had the upper hand.
[Internet Era 1997–2014] The Distributor Model
Digital — Those companies in the Yellow Pages learned fast, and so did the buyers. The biggest innovation came by way of systems, most importantly ‘source to settle’ software. A retailer could now manage an entire fleet of stores simply through a computer monitor and web connection. This gave retailers options unavailable to them before, and the information shifted from the hands of suppliers to the fingertips of retailers…sort of.
I’ll be the first to admit that the influence a billion dollar corporation had on our multi-million dollar enterprise was profound. Retailers began developing their vendor pool and making us better.
The competitive landscape also grew. Many small regional suppliers morphed from installers to management firms. Self-performing and out-sourced models began to coalesce. The competitive advantages were compliance and the ability to provide frequent, low-friction updates. The buyer mindset evolved from trust to trust and verify. “Transparency” took the lead and could be found on every nearly supplier’s website.
Retailers, seeing the profits being made during the supplier model days, prompted a push for a balanced economy. Volume discounting and invoice disclosure put pressure on the supply chain to run a tight ship, DNE’s were trending downward and stress levels for suppliers were trending upward.
In general, a dichotomy was formed in the industry between retailer and vendor that I believe, still remains. The fact that a vendor cannot serve as president of industry organizations speaks to this separation.
Warranted or not, ‘Buyer Beware’ thinking has created an objective reliance on KPI’s and costs, forfeiting the connection to the customer as a consequence of being trapped inside the cells of a spreadsheet. Vendors profits are too low, putting pressure on the supply chain and staff, leading to attrition and ‘turn and burn’ mentality. Facility Managers fight for budgets and relevance within their own companies, often becoming siloed due to the internal politics of “big-business” and risk-averse temperaments. Retailers are under constant pressure to drive down costs on distributor models, resulting in a brokerage model forming — eventually the cards will fall. Aside, hybrid models with self-performance is just not sustainable as travel costs have mirrored the rising cost of fuel since 2001.
What are we solving for? I’ve yet to hear an answer to this question that doesn’t sound like stacking more cards.
Facility Managers — the Store Manager is NOT your customer, the Brand experience is.
[2015 The Collaboration Age (nascent)] The User Model
With the abundance of choice in the marketplace and the blurred lines of services provided by a given vendor, a mindset shift is rumbling. Retailers have developed methodologies for data gathering and are now able to manage a more diverse vendor pool, moving the mindset from Buyer Beware to Specialist Seeking. Retailers are looking for specificity in service and an ability to problem solve; a bolt-on strategy to customize their facilities machines— This is The User model:
No longer seeking general qualifications such as length in business, other clients, coverage and transparency — buyers now ask, “What unique qualification can you provide my brand with?” “What area can you perform best in?”
From a vendor perspective in a distributor model, I will admit that these are very hard questions to answer. My opinion is that in the pursuit of revenue and scale, we have commoditized our work. Competitive advantages all sound the same. Hiring talent from the competition is common place; after all, we are all the same, right?
Here is an exercise to consider. Compare job postings and qualifications for Facilities Managers (retailer) or Operations Managers (vendors) from2000 and in 2014. Do they sound the same?
We have set the bar too low.
The User model is the future
Profits can be found where value is created. Value can be created in 4 ways:
Connect facilities back to the People — customers and employees. This is the only answer to the question “What are we solving for?” The holy grail of this is to discover the correlations between the store environment and store sales. The facilities department connecting their budgets to an enhanced brand experience will be a driving force in The Connected Age. More so, Facilites Departments with access to sound data can become valued resources for other departments.
Connect vendors to the Brand— Empowering vendors to be Brand aware can spur innovation. There are plenty of ways to refinish a floor, but how can you do it without a lingering smell? That lingering smell will contribute to a brand negative experience for store staff and customers; time to innovate. Technical expertise juxtaposed to the live environment is the innovation path; vendors directly connected to the work are in prime position to drive innovation. Problem-solving, problem-solving and more problem-solving.
Connect vendors to each other— Collaborate. This could be a separate blog, but I’ll be brief. Vendors working together for a common client is a win — win. Retailers can support this by establishing sound geographical commitments to vendors, fostering a ‘same team’ mentality.
Pursue research and specificity —Employees and methodology are the only competitive advantages for a vendor within The User model. Vendors that can provide a consultative expertise, supporting the decision making made by Facility Managers will replace the dichotomy forged in The Distributor Model and replace it with a much needed customer advocacy. From work scope development to sequencing the work for minimized impact, sharing first hand experience about what works and insights are invaluable to understaffed facilities departments.
The future is the collabration between retailer and tradesmen with digital tool-belts and Brand awareness. Smaller, self managing vendors in a regionalized ecosystem working together for the benefit of the Brand experience is a more profitable venture for vendors and impactful strategy for Retailers.