Rosy future ahead for facilities management industry

The Importance of Supply Chain Management in FM

Supply chain functions in facilities management (FM) encompass a wide range of activities, including sourcing supplier services, managing original equipment manufacturers (OEMs), purchasing goods, and ensuring efficient storage and distribution. These elements are essential levers that drive the FM industry.

However, the current state of supply chain management in FM is struggling due to its fragmented nature. The industry is dominated by small and medium-sized enterprises (SMEs), many of which face challenges in meeting industry standards, ensuring financial stability, and maintaining a competitive pricing edge.

Key Challenges in FM Supply Chains

1. Achieving Value for Money in a Low-Margin Market

One of the fundamental issues in FM supply chains is balancing cost efficiency with service quality. The industry demands flexible and extended credit terms, yet SMEs often lack the financial resources to provide these terms while maintaining service excellence. As a result, most SMEs struggle to offer value-added services that meet the required standards and timelines.

2. Financial Constraints and Limited Credit Terms

SMEs, which form the backbone of the FM supply chain, are often undercapitalized. This limits their ability to:

• Offer extended credit terms.

• Comply with regulatory requirements.

• Invest in research and development.

While some larger companies possess the necessary capabilities, their rigid conditions often do not align with the needs of FM service providers.

Roadblocks to an Efficient FM Supply Chain

The FM sector faces several roadblocks that hinder the establishment of a seamless supply chain. These include:

1. Fragmented Supplier Base

Due to the inability to achieve a critical mass, over 75% of FM supplies and consumables are sourced from a highly fragmented supplier base. This results in:

• Inconsistent delivery timelines.

• Variations in product quality.

• Irregular order volumes.

2. Lack of Technological Integration

Many FM supply chains lack modern technological solutions for tracking, procurement, and logistics management. This leads to inefficiencies and higher operational costs.

3. Challenges in Managing OEMs

OEMs play a crucial role in FM but are often difficult to negotiate with. They are typically embedded in client organizations from the commissioning stage and impose rigid terms on FM providers. This lack of flexibility further complicates supply chain management, limiting FM providers’ ability to optimize costs and ensure seamless service delivery.

4. Systemic Inefficiencies

All three key players—clients, FM companies, and suppliers—suffer from inefficiencies within the supply chain. The industry’s failure to build a well-diversified and competent supplier base has exacerbated these issues.

Building a Resilient Supply Chain in FM

To overcome these challenges, FM providers must take proactive steps to strengthen their supply chain capabilities. Key strategies include:

1. Developing In-House Supply Chain Expertise

FM companies need to invest in building internal supply chain capabilities that are:

• Technically sound.

• Forward-thinking.

• Proactive in addressing industry challenges.

2. Establishing Strong Supplier Partnerships

Developing a trusted supplier network with proven consistency in quality, financial stability, and credit flexibility is essential. This reduces reliance on fragmented supplier bases and ensures uniformity in service delivery.

3. Leveraging Technology for Supply Chain Optimization

Investing in digital solutions for procurement, logistics, and inventory management can enhance operational efficiency, reduce costs, and improve service quality.

4. Negotiating More Favorable Terms with OEMs

FM companies should work collectively to negotiate better terms with OEMs, advocating for increased flexibility and cost-effective solutions that align with industry needs.

Conclusion

The FM industry’s supply chain challenges are deeply rooted in systemic inefficiencies, financial constraints, and market fragmentation. To build a sustainable and efficient supply chain, FM companies must adopt structured approaches, leverage technology, and establish strong supplier relationships. A well-defined and proactive strategy will help the industry transition from reactive problem-solving to a more streamlined and effective supply chain management system.

Imran Safdar
CO-Founder & CEO – Mukamel Facilities Services Pvt Ltd