Sourcing strategies of facilities management

Abstract

In this study, four sourcing strategies are identified in the delivery of maintenance service in facilities management, namely in-sourcing, out-tasking, outsourcing for cost saving, and outsourcing for capability. Since each of these strategies has merits under specific circumstances, a framework for the selection of appropriate sourcing strategy in particular situations is presented. This framework, which takes into consideration scope of sourcing under consideration and purpose of the sourcing decision, was developed on the basis of results of an earlier research and has been validated by the findings obtained from interviews with practitioners in exemplary organizations. This paper also provides guidelines for implementing the selected sourcing option, along with discussion of the related strategic and operational issues. Practical Implications The traditional approach to outsourcing cannot be the best sourcing strategy under all circumstances. Out-tasking is an alternative option that may be more appropriate in specific situations. This latter approach is widely practised in information technology and facilities management. While the strategic importance of out-tasking is generally recognized, little is understood about its practice. The decision matrix of strategic sourcing presented in this paper provides a useful management tool for selecting the appropriate sourcing strategy. In addition, the ensuing discussion on the implementation process offers insights into the strategic and operational issues related to putting specific sourcing strategies into practice. Although the proposed framework is formulated in the context of facilities management, its application can also be extended to the management of information technology, marketing, human resources and financial services.

Development of a risk-oriented strategic sourcing (ROSS) framework for the construction and electronics manufacturing industries

“…: Trent and Monczka, 2003;Hui and Tsang, 2004;Speklé et al, 2007;Wang et al, 2011), followed by eight (6%) articles with at least two theories, such as resource-based view vs. transactions cost economics theories (e.g. :Essig, 2000;Steinle and Schiele, 2008;Mols, 2010).…”

“…A make-or-buy decision should be based on an assessment of the impact on competitive advantage, competitive environment, capability, cost, supply environment and technologies. Furthermore, Hui and Tsang (2004) develop a matrix to support decision making in facility management sourcing that considers insourcing, out-tasking, outsourcing for cost savings and outsourcing for capability as appropriate strategies. In addition, companies need to consider the operational implementation and should maintain relationships or partnerships with service agents.…”

Implementation of Analytic Hierarchy Process (AHP) decision making framework for building maintenance procurement selection: Case study of Malaysian public universities

“…Subsequently, many different types of procurement methods have been developed to overcome the weaknesses of the existing procurement method and meet the range of service's requirement. The types of procurement method identified through literature review for building maintenance were listed as below [3,4,9,14,35,41,47]: Direct Labour or In-house I In-house is the management process of performing a service by in-house staffdirectly employed by organisationsto run and maintain the building [14,29].The client organisation usually employ direct labour under the terms of conventional employee relationship to monitor and control the performance of maintenance [5,29,45]. Williams [45]highlighted that presentlythere were very less organisations that employ 100% in-house operation but if it really exists, it is not on a large scale.According to Sheng [41], in-house strategy is deemed to be the most fundamental and traditional strategy for the delivery of property management and maintenance services.The operation staffs who are employed directly by the organization are recognized as part of the organization with no existence of service contract tying the relationship together except the ordinary employment contract.…”

“…Lau and Zhang [21]stated that outsourcing strategy enable organizations to gain competitive advantage through cost reduction and improved responsiveness to changing business environment and market demand. This is agreed by [3,42]that outsourcing is a supply strategy often chosen as a means of increasing organizational effectiveness and efficiency.Out-tasking III Out-tasking is defined as "a management process whereby specific tasks, as opposed to a whole package of support function in the case of outsourcing, are performed by a contractor" [14,16]. According to Hui and Tsang [14], the company usually employs a small number of staff to serve as coordinators between internal customers and the external service provider when outsourcing is practised.…”

Change management framework to enable sustainable outsourcing of facilities management services

“…Rapid changes in the business environment lead the organisations toward this trend (Hui and Tsang, 2004). Willcocks (2010) stated that, this trend increased the spending on outsourcing, and outsourcing decision became a strategy in organisations today than ever.…”