Assessing supply base maturity and supplier capability enables better contract decision-making

Abstract:

Globalization has allowed companies to expand exponentially via mergers and acquisitions. In this scenario, it has become challenging for facilities management (FM) to operate on the world stage. Accordingly, there has been a requirement for global suppliers with capabilities to scale up and operate as per the business needs of the clients. However, most often even the global players fail in developed markets with proven supply capabilities. So how does supplier capability stand with respect to the general perception of the market’s perceived maturity?

Introduction:

Traditionally, the maturity of FM outsourcing in individual countries is influenced by legal, taxation, employment, economic and cultural factors. These factors govern the scope/provision for the supplier to access client locations and offer the best quality service with the least possible response time while keeping operational expenditure low. Based on this, the UK is classified as the most mature market followed by the U.S., Western Europe and Australasia. While countries such as India, China, Brazil and South Africa are categorized as developing markets.

The classification of markets into pioneer, developed and developing helps in understanding the overall outlook for FM outsourcing in the respective geographies. However, it does not project a clear picture of the supplier capabilities in these regions which are sometimes clearly overlooked by the buyers while making their sourcing decisions. Often the geography-specific maturity is construed to be equivalent to the FM supplier’s capability in the region; which might be the case in some but often not in all.

Contrary to popular belief, developing markets with respect to FM outsourcing such as India, China, Singapore and Brazil have a high level of supplier capability. While in the matured markets it has traditionally been high, the developing markets have seen an increase in the supplier’s efforts to improve and extend their presence and capabilities across the region.