Creating Resilience
Financial and Professional Services: Turning procurement into a valuable asset
Sector perspectives in Facilities Management Procurement
March 29, 2023 5 Minute Read
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Worldwide economic uncertainty is exacerbating cost pressures and underscoring the importance of both capital planning and cost management. In the wake of the pandemic, businesses in the financial and professional services sector are grappling with labor shortages, inflation and supply chain disruption, all while managing hybrid workplace models and re-evaluating space requirements for their largely office-based portfolios. These challenges are adding to supply chain pressures and complicating real estate operations.Business leaders are paying closer attention to their real estate portfolios, recognizing FM procurement as instrumental for powering supply chains, achieving sustainability goals and driving cost savings. The financial services sector in particular is also looking to real estate to enhance workplace amenities, create hospitality-centric environments, drive office utilization and support talent attraction and retention.
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Utilization, labor and supply chain
The rise of hybrid workplace models has had a profound impact on office occupancy rates, which in turn is reducing the required levels of facilities services. Portfolio consolidation is a tactic many enterprises are leveraging in response to reduced occupancy, and financial institutions have focused these efforts on retail banking. Resourcing of security, janitorial, building engineering, site landscape and certain aspects of HVAC can all be calibrated to match space utilization, and FM procurement teams are instrumental in implementing these adjustments.Labor and logistics issues are causing major delays across the supply chain. Currently, 77% of work order delays are attributed to unavailable materials. As a best practice, companies are encouraged to standardize purchasing and equipment configuration, forward-buy critical spares, optimize inventory management and engage with suppliers to understand their dependencies and delivery risks. Continuity of service is essential for financial institutions and increasing the stock of critical spares has become a common practice as a result.
Roadmaps for meeting ESG targets
This sector has an increased focus on sustainability as Environmental, Social and Governance (ESG) matters as organizations face pressure to demonstrate tangible progress toward decarbonization and compliance with new regulations. Net-zero commitments are increasing, particularly in the wake of the U.S. Securities and Exchange Commission (SEC) releasing draft climate-related reporting requirements in early 2022. The financial and professional services sector can benefit from programs such as the U.S. Green Building Council’s TRUE Certification that rewards companies’ efforts in driving to zero waste.In addition to tightening regulations, pressure from investors seeking to safeguard their returns against climate risks is driving increased commitment to sustainability. These trends are compelling FM procurement teams to proactively build supply chains that are resilient to climate change. Failure to do so could create downstream risk from customers who expect higher sustainability performance.
An important ESG component, diversity, equity and inclusion (DE&I) is also a growing focus for many companies. This sector is highly focused on supplier diversity and has targets in place to grow diverse supplier spend within the FM supply chain.
The future of procurement
While procurement teams should be leveraged as strategic business partners, there is significant variance within this sector in terms of alignment and involvement in developing corporate real estate (CRE) and facilities strategies.Forecasts anticipate that financial services companies will emerge from a recession more quickly than others and RFPs are expected to increase as a result. This is largely driven by the seismic shift in how companies are thinking about the workplace and their FM strategies, which have changed greatly in the last few years with increased hybrid work changing the scope of services.
As FM procurement leaders seek to improve their relationships with their CRE clients, they must provide the subject matter expertise to re-design and optimize services. Taking that approach is most effective for driving cost savings, quality and innovation.
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Report
February 6, 2023Facilities Management Procurement Perspectives
Facilities Management procurement leaders share their top 2023 priorities for supply chain inflation, ESG, organization design and more.
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