It really wasn’t that long ago that the situation the world finds itself in today was inconceivable for the vast majority of people. The novel coronavirus was something that we in the UK watched on the news, with ever growing sympathy, while life pretty much carried on as normal.
But today, we find ourselves in a brave new world and it’s one that doesn’t look set to return to the ‘normal’ we once knew any time soon. For catering and facilities management firms, times are tough.
Business & Industry Foodservice Procurement
Like in any industry, there is a food chain and much of what we do is determined by the actions of our clients. It’s safe to say that much of our B&I business has been curtailed by lockdown, however, we are seeing movement in the healthcare, justice & defence sectors.
Around the world, Governments have taken remarkable steps to support their economies, and the UK has been no exception. But as welcome as this help has been, it won’t last forever and additional capital will need to be paid back. The longer we stay in stasis the harder it becomes to recover.
The struggle is real and not only will the way we operated pre-Covid-19 not do much to help the sector in the current situation, there’s a compelling argument to say it’s something we should have moved away from a long time ago.
The default mode for the contracted services sectors seemed to be for organisations to box themselves in and expect an outsourcer to predict and assume risk for the next five years of operations. This scenario is especially unreasonable today when it’s hard for anyone to even know what’s happening next week.
The good news is there is another way to operate.
In short, it comes down to collaboration and this is what makes ‘Vested’ such an interesting proposition. Developed by University of Tennessee educator Kate Vitasek, the Vested concept is a hybrid business model that focuses on outcome and results rather than transactions.
So how does it work? Vested is built on the common foundation of all parties working together for a common aim and it is an incentivised model that enables suppliers to earn additional profit through innovation, gain share and empowerment.
It sounds simple enough and certainly makes a lot of sense but getting to this requires a significant amount of business process mapping, trust and confidence to ensure that your partner is with you.
Given how used to ‘determining specific requirements’ our sector has become, the idea of ‘agreeing with a partner’ can be a difficult, especially for those whose primary objective is to make sure their organisation is not legally exposed.
The thing about collaboration is that it potentially eliminates territorialism, unfair competition and ‘ performance stalking’ – (where an organisation sets many KPIs and vigorously pursues them at great expense to both parties) – and focuses on empowerment, working together and trust. It is not just about outcomes but belief, culture and attitude.
According to the Vested concept, it’s comes down to thinking about “what’s in it for we” rather than “what’s in it for me”. It’s about all parties winning together and occasionally losing together.
When P&G originally appointed JLL as its property & facilities provider, the two companies had a very much performance-based approach that ended up with a challenging relationship driven by tough penalty-laden KPIs.
A switch to Vested, which took a couple of years to set up, resulted in a shared vision with guiding principles – and the ultimate prize was an effective collaboratively run estate. In this and similar examples, organisations have saved up to 40% of their total cost of operation.
All parties become aligned to the same quantifiable objectives, with the rules of the game clearly spelled out in the contract – yes, there are contracts but they are relational not transactional – and the results are overwhelmingly positive for all involved.
The customer wins because they get higher service levels. Procurement wins because it gets the best price, which is not loaded with risk premiums and the like. And the supplier can earn more by bringing innovation to the party.
By creating value through win-win solutions, all parties work together to make a bigger and better pie, not fight over every last crumb.
Article by, Julian Fris, Director, Neller Davies
Business & Industry Foodservice Procurement – 21 August 2020 – Business & Industry Foodservice Procurement