The facilities management ("FM") industry has faced substantial disruption since 2020, when the Covid-19 pandemic dramatically and unexpectedly disrupted supply chains and normal ways of working. Since then, FM companies have had to be adaptable and flexible in their approach to ensure they are offering services that their clients want. Here we consider the top five challenges being tackled by the sector.
Contract resilience
Supply chains are complex, global and increasingly interconnected. When one part of the network is exposed to risk, all are vulnerable to disruption. Focussing on supply chain resilience in conjunction with legal and operational risk mitigation will enable businesses to respond to adverse events faster than the competition, limit the impact and focus on increasing market share.
Accelerated use of artificial intelligence (AI), analytics and automation across the supply chain
As we have commented in previous blogs, trends indicate the implementation of AI and machine learning for predictive and prescriptive analytics will continue to accelerate, with broad-reaching effects across the end-to-end supply chain. Businesses that harness the power of big data and automation will have a competitive advantage in visibility, operational efficiency and quality. For example, the use of AI and advanced algorithms with a focus on risk mitigation should assist in predicting whether any problems will occur — and if so, support in providing solutions.
Cybersecurity
The explosion of data and data-driven organisations through AI, blockchain and the Internet of Things (IoT) is creating much more interwoven areas of vulnerability in systems and tools. Supply chains must work to protect their networks, devices, people and programs through practical and legal risk mitigation.
But it also presents opportunities to revolutionise supply chains by increasing visibility and real-time tracking for both raw materials and final products. This is making networks more responsive and competitive. Cheap and reliable sensors that provide large amounts of data are essential for large-scale implementation of IoT systems. Once again supply chain resilience will play a major part in mitigating vulnerabilities.
Energy prices
The pandemic was the starting point of a global wholesale energy market price surge. Fuel prices have also skyrocketed, which has had an impact on global supply chains and contract margins. Managing energy costs will be a critical component of FM over the next two years. This can be achieved through two means: reducing consumption and reducing rates.
- Reducing consumption - FM companies might consider further investment in energy-saving technologies, such as energy management technology that allows analysis of real-time data to identify opportunities to reduce consumption, or energy efficiency building measures (for example smart building sensors that only switch on lighting or heating when spaces are occupied).
- Reducing rates - FM businesses should ensure they are proactive in negotiating with energy suppliers to ensure the best rates are obtained.
It is key that FM businesses maintain good contract governance to ensure the opportunities for negotiation are met. Keep on top of contract renewals and plan in advance when a deadline is approaching. Consider using a contract management system. Brodies has created a complete contract management solution, so please get in touch if you would like to hear more on that.
Re-shoring: returning to local relationships
While globalisation pushed supply chains to other countries around the globe, businesses have recently increasingly embraced the notion of re-shoring, transferring their overseas business operations back to their original locations. Significant advantages include delivery performance, product quality, and the flexibility to respond to customer demands. The pandemic has revealed a major downside to globalisation: when borders closed, entire industries were shut down due to a lack of raw materials. Businesses are now re-determining which parts of their production will be global and which will be local.
These trends and challenges being faced by the FM sector indicate a re-assessment of approach to risk and opportunities in supply chain management. An essential aspect to this is clarity in contractual relationships, together with appropriate practical risk mitigations.
If you require advice on any of the issues discussed in this blog, please do not hesitate to contact our team.
