Bold Facilities Management Outsourcing Reduces Costs by 25%
Capstan was retained by a venerable US retailer to manage an RFP process for Facilities Management and Building Engineering Services during a time when sales per store were declining and the company’s financial viability was in doubt. We ran a successful competitive bid and contract negotiation process to select a new service provider who delivered an immediate 25% savings in annual operating expenses and much needed improvements in mobile engineering processes and technology.
Competition from Amazon and traditional retailers was hurting sales and profitability of the company, and the senior leadership team had just been dismissed by the Board of Directors. The Facilities group responsible for over 1,000 stores was facing mandatory staff cuts and voluntary departures of key staff. The incumbent FM supplier had been in place for ten years and was not providing the innovations or cost savings expected.
How Capstan Helped
Despite the time and cost pressures facing the FM team, we ran the preferred Capstan RFP process, maximizing communications and interface time between a short list of bidders and the client team. We took four suppliers through introductory sessions, technology demos and solution sessions, and asked for separate bids on the home office campus complex and the retail store portfolio. We convinced the company to provide a detailed cost baseline to the bidders, and then we asked the bidders to detail how they planned to meet our savings goals. Several good ideas were proposed, but most entailed reductions in service levels that the company was unwilling to accept. Finally, during the Best and Final Offer stage of the process, the winning bidder described how their dedicated mobile maintenance solution could help meet our goals. We were able to secure a major investment in transition by the service provider, without a financial guarantee by the company. We wrote a Transition Charter agreed to by both sides, and then served as the PMO lead during transition to coordinate the various service line and support teams involved.
Benefits to the Client
The transition proved successful, including a new mobile technology solution developed by the supplier. Since the completion of the transition, the supplier has continued to meet the Saving Glide Path in the contract, and the company’s overall financial health has improved.