Does the facility management sector take a structured approach to managing its tail spend?

January 14th, 2021

Having analysed the management of tail spend in the construction, transport and storage industries, Manutan has carried out its latest barometer on facility management. Using the Savin'side® method, the purchasing habits of 38 major French companies have been scrutinised across six key areas. With an overall Savin'side® rating of 3/5, the sector shows good overall performance. However, despite performing well in terms of logistics, further improvements still need to be made in two major areas: supplier portfolio streamlining and transaction digitisation.

Focus no. 1: Supplier streamlining

French facility management companies aren't taking full advantage of what Manutan has to offer, primarily purchasing products from just four out of eight categories: security, warehouse, office and hygiene. As a result of the health crisis, PPE and hygiene equipment have been purchased extensively, so much so that these protective products account for 15% of the sector's turnover over the period from January to December 2020.

Focus no. 2: Product optimisation

In the facility management sector, companies mainly purchase high-end products. This trend has once again been impacted by the COVID-19 crisis. With logistics chains disrupted, companies have not always been able to select a suitable product pricing range. By contrast, the purchase of high-end products by [1]best-in-class companies is almost half compared to the industry average.

Focus no. 3: Transaction digitalisation 

Although facility management companies have begun to introduce digital transformation, there is still room for improvement in terms of digitising their own procurement processes. In fact, only 19% of the sector's transactions are paperless, while best-in-class companies are digitising almost one in two transactions (46%).

Focus no. 4: Logistics optimisation

One of the sector's real strengths is that companies never exceed more than three deliveries of tail spend per week at each site. This is a promising finding for the sector, as emergency performance remains one of the industry's biggest challenges.

Focus no. 5: Agreement implementation

In our evaluation, only 34% of companies make full use of the terms of their contract, meaning their expenditure per employee each year is higher than the industry average (€89). With a stronger commitment to digitising their processes, the best-in-class companies achieved a rate of 67%.

Focus no. 6: Quality control

The facility management sector has a service rate of 86%, while the best-in-class companies scored an additional 11 points. The sources of insufficient quality identified were predominantly related to:

  • Delivery times and product errors, as a result of COVID-19.
  • Billing errors, underlining the importance of introducing paperless invoices.

Despite the inevitable impact of the pandemic, facility management companies take a relatively structured approach when it comes to managing their tail spend. There are two key areas to prioritise in order to further reduce and bring unscheduled purchases under control: streamlining the supplier portfolio for product categories that have already been optimised and digitising transactions using an e-procurement solution.


[1]  Best-in-class companies represent the top 20% best-performing organisations across all six levers examined as part of our Savin'side® evaluation.