Defeating Facilities Management

When FMs come calling, they don't knock on the in-plant manager's door. It's up to you to be ready—and beat them to the punch.

Facilities Management (FM) companies say they can save corporations, school systems, hospitals or any organization with an in-plant, millions of dollars annually by better managing the in-plant and better utilizing the equipment and personnel.

They often claim they can do this with better materials, less space, less time and greater efficiency, utilizing professionals with years of experience. The FM will take over your reproduction tasks, freeing your company to concentrate on its core business.

The FM may also offer to hire existing employees to make it easy to change over to their service, and will even use the existing facility to make it convenient.

With something as great as this, why does your company still operate an in-plant? That's exactly what your upper management is going to ask itself the first time it is approached by an FM. You had better hope the question is directed at you because if it's not, you may have lost the battle without a chance to fight.

If you do get a chance, though, how are you going to respond? Are the FM's claims right? How do you defend your in-plant from a possible takeover? To be prepared, you must understand how FMs operate.

Their Trademark Tactics

FMs approach upper management with a proposal that shows that they are more capable of managing the in-plant than you are. They often portray in-plants as inefficient and costly, and their proposal uses catchy terms like "downsizing," "core business," "outsourcing," "efficiency experts" and "reduction in operating costs."

The FMs contend that they have a proven track record of improvements, and will leave your management to concentrate on its core business. The FM will rarely contact the in-plant manager directly. They don't want the manager involved. This begs the question: why don't they want you involved? Do they have something to fear? Is something wrong with the facts they are presenting that they're afraid you, the manager, will spot.

The answer is, yes, they have something to fear if you are involved: the success of their proposal. The facts they present are distorted, based, they say, on some national averages and cost studies. They're not based on your actual production figures. The FM's goal is to make the proposal so convincing to upper management that management can't say no and will readily outsource.

At the Cherry Creek School District in Denver, Tim Waltz, in-plant manager, was approached by his supervisor, who informed him he had received a proposal from an FM. The FM claimed it could save the school district millions of dollars per year by taking over the in-plant. Waltz operated a partial chargeback system and knew his total operating expenses were less than a million annually. So how could the FM save them millions? Obviously they could not.

Waltz put together a bid package of the most common job types by category. The school system hired an independent consultant who sent this package to 25 of the largest commercial printers in the area. The result, the consultant reported, showed the in-plant saved the school district between $600,000 and $1 million annually. The in-plant was saved. Fortunately in this case the in-plant had the opportunity to defend itself.

What Should You Do?

As an in-plant manager you can control or certainly influence the destiny of your in-plant by being aware of how FMs work. One of your first tasks should be to determine the exact cost of the jobs you produce. Once you have established those internal costs, obtain costs for doing similar jobs with commercial vendors. If you are managing properly, the internal costs will, in the majority of cases, be lower.

It also may be beneficial to have an independent group, like your purchasing department, obtain quotations and make the cost comparisons. This will give you an independent, unbiased group that can support your claim of being able to produce jobs more cost effectively.

This cost comparison process should be an ongoing project every quarter or at least semi-annually. If you discover a particular job type that costs more to produce internally, negotiate with the requesting department to design the job around your capabilities. You may also consider strategic outsourcing or omnisourcing of some jobs to save your company money while keeping the in-plant in business for the jobs it can do most economically.

An all-out closing of the in-plant by giving the work to an FM is never the best solution since certain items will always be best produced in-house. Organizations that have stopped their in-house printing often realize, too late, that it would have been more economical and efficient to retain certain functions.

Report cost differences (internal versus commercial) to your upper management on a frequent basis. Make sure they fully understand what the cost impact would be if you outsourced your entire workload. Also, report your production and your time performance monthly, including the efforts you are making to improve.

Be aggressive in reporting all of this information to management on a regular basis. You must convince them that you are an asset to the organization and that you are conscious of job costs and production efficiency, and that you also have figures to support your claim. In doing this, you are demonstrating that you are the company's printing expert and should be consulted on all printing matters. That way when the FM comes knocking, your boss will send the rep right to you. That meeting should end quickly.

Scott Richards, supervisor of printing and office services for Alliant Tech Systems, went through the process of justifying his in-plant and comparing costs every four months with his management. Several months ago, in an effort to gain high-speed copy equipment, Richards put together a bid package and had the purchasing department send it to 10 companies.

The package requested costs for leasing high-speed copiers, convenience copiers and color copiers and also indicated that facilities management bids would be considered. Scott also turned over his costs to the purchasing department for an independent, impartial comparison. Three FM bids were received and the costs were compared. The in-plant costs were dramatically lower than the FM bids.

"I was even surprised at how much lower our costs were," Scott says. He now believes he has satisfied his management's concern over the cost effectiveness and responsiveness of his in-plant operation. His efforts point out one of the most common-sense truths about FMs: they have to make a profit, so obviously their services are going to cost more than those of an efficient in-plant.

Roll With The Changes

As an in-plant manager you need to also keep up with the technology changes taking place in the printing business. Review your equipment at least once a year to determine if it is still adequately performing the function intended. If it's not, propose to replace it with newer equipment that can perform more efficiently and save the company money. Don't let your equipment fall into a state of disrepair or become grossly outdated.

One argument that the FM will make is that it will operate with the most technologically current equipment. If you avoid being light years behind in technology, you will minimize any potential FM claim of superiority in this area.

Don't Hide In Your Office

Whether or not you ever wanted to be in public relations, you are. You are the in-plant's image. You have to form good relationships with the key people that you support. Understand their requirements and make them appreciate the service you provide.

Do the impossible. Get their job done regardless of how quickly they need it—and then ask them to mention to their management that you played a critical role in meeting their deadline. Don't ever make them dread having to have material reproduced.

Also, you must become your organization's communications expert. In addition to handling just the reproduction of your customers work, expand into other areas of support. If you have high-speed network printing capabilities, offer to accept data in digital format, print the material and then complete the process by kitting and packaging everything. Even offer to handle the shipping or distribution.

Remember you are the expert. Your customers probably do not fully understand the entire process and would be much happier if they were dealing with a full-service operation that eliminates these problems for them. Make your in-plant so valuable that management looks at you as an integral part of the success of the organization and would not consider outsourcing.

The Core Business Question

In most cases, printing is not your organization's core business. But since you already understand that core business, why would it be in the organization's best interest to have an outside company handle the services that you now control?

You are more sensitive to the organization's needs and demands, since you have a vested interest in ensuring the organization's success. You are part of the company; an FM is not.

Scott Richards found that, in addition to the cost his in-plant was saving the corporation, he could do the work faster than the FM proposed.

"Most of our jobs are rush and need to be completed in one to four hours," he notes. "Our in-plant can guarantee these times."

So, can an FM really save millions of dollars per year? The answer is "absolutely not," and if you are managing properly they can't even come close.

In-plants do not usually profit from their work so how can a profit-minded FM be less expensive? It can't. In fact, in an effort to make it's profit as large as possible it will use materials that may be below your current standards, consolidate similar jobs—which may mean missing deadlines—and charge for all of the extras that you now offer for free or include in your base cost. You can also expect to pay additional costs for every change you make to an order with an FM.

You must be proactive to ensure that your management knows what you are doing, how your costs compare with commercial vendors and how productive and responsive you are. You cannot wait and respond after an FM has approached your management.

If you wait, it may be too late.

by Larry Ruhlman