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Outsourcing School part 2

The Outsourcing School is a new permanent feature of Nova. We want to help create more intelligent business and share the know-how and experience we’ve accumulated over the years. That’s why were inviting our experts to explain things, and give us their best tricks and tips. Each issue of Nova will deal with and explain the building-blocks of an outsourcing business.

How can I control my supplier?

Charlotte Almberg has worked for Coor Service Management for 12 years, and in this time, has held various positions, working on a variety of accounts, mainly in Sweden, but in Denmark and Norway too. She’s currently a Business Unit President of Coor in Norway, and in this issue of Nova, she shares her experiences of supplier control.

What’s the difference between measuring and controlling an internal FM department vs. a supplier?

I’ve worked on a lot of first-generation outsourcing start-ups, and in my experience, there’s a big difference. If the client previously ran the services themselves, operational issues have taken more time. By collaborating with an external specialist, the focus shifts to strategic and tactical questions, so the need for control alters radically.

Controlling internal delivery is one thing, but controlling a supplier is completely different. Customers can no longer operate as a manager of operational staff, which is a big change. And rather than running day-to-day work, which is up to the supplier, it’s about the results and perception of the delivery.

How do you take control of the delivery?

It’s important that you prepare a plan focuses and expectations together, that you find a good format for the supply partnership, that you’re active, work on updates and setting standards. In addition, you need to find parameters that are relevant, with for example, finances always being important. What are we paying for and is the supplier delivering the savings promised? Be prepared to develop and adjust delivery as you find out and evaluate results. Make demands of your supplier to be flexible, both in thinking, and in terms of the level of service and volumes.

Controlling internal delivery is one thing, but controlling a supplier is completely different.

Charlotte Almberg, Business Unit President, Coor Norway

How do you design the right parameters?

When an agreement between supplier and client is signed, the criteria (KPIs) should be agreed. It’s important to try to capture objective criteria, such as savings and efficiency, as well as subjective ones, i.e. perceptions. Good criteria often emerge from healthy interaction between client and supplier.

The client knows its business best, but suppliers often have more experience and can bring their expertise to bear. The client must be able to convey its level of ambition, requirements for savings, financial conditions, priorities and what they think is important. The supplier’s contribution is to transform these ambitions into concrete criteria, which you discuss and adopt collectively.

What are good checkpoints?

The supplier and client identify good checkpoints together by discussing expectations and results. They then test and measure over a six-month period, following up to verify that results really are as expected. It’s important to agree about methodologies and data sources, so if we’re using KPIs per square meter, we have to base this on the right data, and keep informed when changes occur.

How many KPIs should you have?

Obviously, that’s up to the individual, but I wouldn’t recommend more than ten. To many KPIs would take up too much time and you probably can’t measure all of them. An example of a good KPI is number of faults per thousand square meters.

It’s important to look at trends and stick with the KPIs you’ve chosen so any analysis is fair. To get a good overview, KPIs can also be combined with statistics, such as how many visitors the supplier has received in a predetermined period. In this way, clients can track variations in volume.

To summarize—what’s important for the client to bear in mind?

First and foremost: read through your agreement and ensure that it’s consistent with what you order. It’s important to maintain a dialogue with the supplier and emphasize that you agree and have the same goals for the delivery. Use the agreement you have and link your discussions to it, and ensure that you talk regularly and often. When starting up a new partnership, supplier meetings should be weekly, to eventually go monthly. Make sure you keep your supplier informed of forthcoming changes, keep them updated.

When you’re measuring a delivery, it’s easy to put a lot of focus on the KPIs intended to create savings, rationalization and development, but don’t forget the subjective values. Take the time to find out from your people how they perceive the situation, what they’re satisfied or dissatisfied with. This offers you good feedback on the delivery itself, but also if it’s focusing on the right things.

If you want to know more about successful agreements, feel free to contact Charlotte Almberg