Albertsons Corporation, a multi-billion-dollar grocery retailer with over 2,500 facilities, was facing a variety of problems related to its facility portfolio.
The “Big 3” symptoms of the problems were obvious and consistent enterprise wide:
- Expenses increasing
- Life spans decreasing
- Lack of information to measure overall cost of ownership
Director of Facilities Pradip Mehta and Strategic Sourcing Chris Doring were tasked with identifying the breadth and depth of the problems and determining an appropriate solution.
Although the symptoms were obvious, the root causes were not. In fact, they were quite different based on whether you were talking with a facility decision maker or a financial/procurement decision maker.
From the facilities standpoint, the issues were:
- Limited resources and funding
- Inability to effectively manage a large group of vendors
- Inability to maintain a standard of quality
- Lack of clear strategic direction from corporate decision makers
- Reactive management approach
- Facility services fell in to a non-core, non-revenue generating spend bucket that did not get enough corporate attention or resources
Form the procurement/finance standpoint, the issues were:
- Minimal benchmarking and measuring of relevant metrics
- Minimal tracking and monitoring capabilities
- Information coming to them was subjective and qualitative (not objective and quantitative)
- Inability to assign accurate budgets
- No information available on overall condition of assets
- No history of effective strategies and best practices
- General lack of data/knowledge about systems currently in place
Mehta and Doring were given specific instruction to “streamline corporate processes and reduce cost for maintenance of all trades.” In short, solve all of Albertsons facility related problems.
Through extensive research, the strategic sourcing team and the facilities team, together, identified us as the solution for Albertsons facility related needs. Through the discovery stage, we could not only confirm that Albertsons problems were real, but in fact they were escalating in size and scope. In addition, there were several other problems the Albertsons team was not even aware of.
Albertsons had consolidated their vendor base to better manage many vendors and control facilities related spend. The result was the opposite of what they had hoped. This management philosophy resulted in a lack of vendor competition, especially at the local level. A loss in the integrity of data collected occurred as there were no checks and balances on the work performed. The quality of work suffered as they tried to hold vendors to price controls at the national level. We instantly delivered savings by taking over the vendor management side of Albertsons business.
Facilities were deemed a non-core, depreciating asset and a “good enough” management philosophy was instituted to handle all facility related issues. We not only consulted in-house staff, but also provided supplemental services in business support categories like data analysis, software, research and development, operations, and vendor management. All at no out-of-pocket cost to Albertsons.
Albertsons was collecting data on their systems, but there were no processes or systems in place for how to evaluate the data and form useful conclusions on how to best use it to further their business goal of reducing overall cost of ownership. It was collecting data for the sake of collecting data. We developed a true, data-driven, predictive analytics program that helped Albertsons reduce expensive reactive events from occurring in the first place.
As is the norm in the industry, Albertsons was told that preventative maintenance programs are universally a good idea. We could show why that’s simply not the case. Most large facility stakeholders institute a cookie-cutter preventative maintenance program that applies the same treatment to all systems, running in all climates and environments. It’s like changing the oil in your car every 3 months, regardless of whether you drove 1,000 miles or 10,000 miles. The result is that their preventative maintenance program was not delivering positive return on investment. In fact, the program was losing money. Some systems were over-serviced resulting in wasted spend. Others were under-serviced resulting in shortened life spans. We instituted a preservation management program that used the knowledge gained not only from Albertsons systems, but the millions of data points accessed from all clients.
Through a series of tangible cost saving steps, we delivered a 39% reduction in Albertsons day-to-day roofing repair spend. In addition, and maybe most importantly, we created an environment where a facilities decision maker and a financial/procurement decision maker could agree on one resource that bridged the gap between their personal and department goals in a way that delivered lasting value to Albertsons.
” Incorporating us into our facility management processes has enabled us to reach levels of efficiencies we were unable to previously obtain. Through this partnership over the past 2 years, we have dramatically reduced our time, effort and cost.”
Chris Doring, Strategic Sourcing
“There is no way for an internal facility department to achieve the results we can produce for a corporation. It is an impossible task. For the past 39 years, I have been in facility management and this is by far the best program I have ever worked with and I would recommend this program to any corporation.”
Pradip Mehta, Director of Facilities for Albertsons