Time to Consider an ESM Provider?
One-sourcing ESM focuses on strategic solutions, not cost..
With the economy continuing to slow in late 2001, the future of retail has become a much-discussed issue. Smaller companies are folding and larger corporations are cutting back on new store growth, focusing instead on increasing sales within the existing inventory of locations. According to census data, non-residential building construction the fourth quarter of 2001 was about 5% lower than the previous quarter. This pattern will likely continue until the economy recovers. The events of September 11 simply accelerated the trend. It will be difficult to tell how this recession will affect retail until the turn-around is complete. While the market will definitely return, the big question becomes “What steps do we take to survive the short term?”
One survival technique being employed on a frequent basis is one-sourcing exterior services, also known as ESM (exterior services management). That is, consolidating services under the management of one provider, thus cutting back on the need to oversee multiple contracts. And while many conversations with CFOs begin and end with cost savings, exterior services companies are proposing that cost is not the only issue when it comes to consolidation in a competitive economy.
In a survival situation, departmental budget cuts and employee reduction are standard. After the company has shaved off excess weight, ESM companies are focusing on finding additional savings of manpower and corporate dollars. By consolidating various services under one contract, time spent in preparing specifications, RFP support and evaluation, negotiations and awarding of numerous contracts is lessened or eliminated. This frees time for over-taxed executives to re-focus on core values.
Strategic Partners Versus One-sourcing
Astute management teams are turning to ESM providers not only to get the lawn mowed and the snow removed, but also as partners in the delivery of needed services. Because the ESM companies specialize in outside services, they bring a professional approach to the management of these services, much like a supply management consultant would become part of the supply chain team.
The situation has evolved to where the ESM provider is not just a provider that can solve a single problem, but also a strategic player that can help take the company to the next level. The entire concept is for two companies to become partners, allowing them to take advantage of leveraging and the economies of scale that accompany a single contract. The goal is to consolidate all the exterior facility services to create cost containment and service standardization.
Saving Money In Other Ways
Currently, many companies are in the process of finding ways to save time and money. This is necessary so that corporations can remain a stakeholder in their market space. Consequently, the economic shakedown means that the work will multiply for most property portfolio managers and retail operations personnel. Executives are beginning to view ESM one-sourcing as a way to create and control value, not just a way to save money.
What about Quality?
Internal and external savings are one thing, but if attention to details and the overall appearance of the facility is not part of the equation, the entire process is void. In response, most ESM companies pay close attention to quality. Many employ professionals from the golf industry, nurserymen or other horticultural focused individuals, even finding employees from the parks and recreation field. These outside personnel help insure that quality is part of the overall solution.
And they are utilizing technology as part of the answer. Digital cameras, in-field handheld computers, Web sites and satellite-based GPS site location contribute to ESM’s increasing sophistication.
Is Your Company An ESM Candidate?
- 1. Is your management team trained to recruit, employ, monitor and release various sub-contractors having responsibility for power washing, green care, parking lot sweeping, tree trimming, snow removal, ice control and parking lot maintenance?
- 2. Does this added job responsibility take away from the store manager’s core responsibility of profit and customer service?
- 3. What is the true spend for invoice handling, contract management, insurance certification, bid preparation and review and the other internal costs involved with exterior services management?
- 4. Consultants tell us a clean store makes a buying decision easier. What affect does a debris-filled parking lot, chewing gum on the entrance sidewalk, weeds or dead bushes in the planting beds, snow in the lot or on the sidewalk or a poorly-maintained lawn have on the potential customer walking in the door?
- 5. How do you measure your curb appeal? Does it contribute to or distract from the bottom line? Just as an instore display attracts a buyer, so does the exterior condition invite in a potential customer.
- 6. Is a single call center for all exterior services management situations the best solution?
- 7. Do your sites all meet the same portfolio profile assuring standardization and how can you verify?
Consider these questions and how they apply to your situation. It may be time to consider the services of an ESM provider.