What's in this episode?
In this episode of Facilities Management Coffee Talk, we discuss managing master service agreements (MSAs), managing your service providers, and keeping good relationships with your service providers.
Trey: Good morning and welcome to the continuation of series two of our facilities management coffee talks. Returning today as our guest is Mike Parks, the senior vice president of product strategy for the Accruent Verisae Solution. Listeners have requested to hear more from Mike based on his strong background in grocery. Mike, for those listeners that may not have tuned in on a prior podcast, can you just provide a short history of your work in the grocery industry?
Mike: Yeah, Trey, happy to. And thanks so much for having me back. So I've been affiliated with Accruent through an acquisition Verisae for about six and a half years. Prior to coming to work for Accruent and Verisae, I was in the grocery industry for just over 23 years. Now this started as a 16 year old young man working as a box person for a grocery chain in southern California called Alpha-beta. I've been a store manager an assistant district manager and have worked in capital budgeting and finance and when... Store operations for a number of stores and most recently in my career before getting into the software side, I ran facilities, maintenance and energy for a supermarket chain. I have been drafting master services agreements and what I would call service contractor bid information since roughly 2010 and in my experience with Verisae and Accruent, I have helped dozens of customers revise their master services agreements and really put together key performance indicators on the management of their service contractors.
Trey: That's perfect Mike. That leads us to what our subject today is and that's looking at contractor service agreement or master service agreements and how do you manage them? Understand Mike, our listeners, some work within very small grocery chains and others are some of the largest in North America. Can you share a little feedback on when and how, at what size should our listeners start entertaining master service agreements?
Mike: Yeah, absolutely. Trey, I'll be happy to. So it's, and again it's my opinion, but through experience working with other customers, I think that every operator, irrespective of the number of locations, should have master services agreements in their organization. That said, you do not need them for every trade. So there was a period of time where I worked for an operator that had approximately 40 retail locations. We were just over a billion dollar supermarket company. And so for the large categories of expense like refrigeration, HVAC, lighting, kitchen equipment, we had master services agreements, but for the ancillary repairs like parking lot repair or the locksmith, we wouldn't necessarily have a master services agreement. We would do those on individual invoice needs. For larger organizations, a hundred plus locations that are spread out across a geographic area. I would highly recommend using a master services agreement for every trade group that you manage.
Trey: So knowing that, that's really good. Knowing that, as our listeners are starting to put some of these in place, they are operators, but they all love best practices. What are some of the aspects of master service agreements that are often overlooked?
Mike: Yeah. I think one of the things that's most important to do is to view this as a way for you and your service providers to work closely together for a common goal. And to do that you really need to create a level playing field. These master services agreements should show your contractor defined service areas by category or trade. There should be a standard operating procedure for service contract award as well as a normal time, maybe it's a once every year or once every two years, where you evaluate these master services agreements and you potentially change the contractors that are doing work across your state. You want to create a shared responsibility for the operator, for the provider, and even for the OEM manufacturer on these results. And then you should have a set of KPIs or key performance indicators so your contractors know how you're evaluating their performance and you should report on this on a regular basis.
Trey: So that's interesting. I really get into the stakeholders that are engaged in making or required to make a program like this successful. How do you ensure compliance for your service providers tied to MSAs, because obviously they're operating outside the organization.
Mike: Yeah. So it all starts with what information do I have access to. So if I'm doing paper invoicing for a contractor, if I'm not using a computerized maintenance management solution that potentially is developed in house or purchased from a third party software provider, I have to make sure that the key performance indicators and benchmarks that I choose are ones that I can validate. So even with the paper invoice, I've got the ability to look at things like what is the average order value for repair? What is the percentage of repairs that potentially had a recall or revisit required? What is the time to fix on critical issues? I want to make sure that you know, it's all about using the information that I have. So if I've got a [CMS 00:05:11] solution, now I can start to see, you know, did you have a service level agreement for what time you should have shown up at a location, what time you should have started work or potentially finished the job? What percentage of your time was recorded in an application as opposed to added as a labor adjustments? It just depends on the information that I have at my disposal because that will allow me to establish a performance benchmark, right? I want to be able to know that if I'm doing plumbing in a specific geographic area and I potentially need to clean out a grease trap, I've got the ability to benchmark how much should that typically cost me, how long should it typically take and what's the percentage of time that I might have to have a re-call or re-visit. I'm going to gauge all of my providers on their performance against benchmark, not against some pie in the sky, aspirational idea I have in my head.
Trey: So Mike, I'm looking at my notes and I'm going back to a comment you made earlier, which was making this process easy for service providers. So let's say we get the MSAs in place, we're happy, we've negotiated everything. How do we make it easy for service providers to stay in compliance?
Mike: Yeah. So I think there's lots of different things that we can do. First and foremost, we as operators often have information that providers do not. And so we're in a position to award service by volume and we can anticipate service by trade for our providers. We can let them know that in June or July or August, we're going to see a significant spike in the amount of trucks that we need rolled for refrigeration and HVAC, and across the sites that they manage, we can arm them to be prepared to meet that service demand because in March and in April they may be saying, "Hey, did we do something wrong? We're not getting enough service from you today." And the answer is "No. Just refrigerated systems love mild weather." But there are some other things that we can do. If I'm using a software platform, I've got the ability to provide a living breathing dashboard for my provider. So I give them ease of use in terms of interacting with the application. They can see all of their work. They can assign work to a technician, that technician can use a mobile device to take action against that work, but I can also see all of my performance metrics on a dashboard. Every time I log in I can see how am I performing compared to my clients' KPIs. Am I meeting their fixed level SOA? Is my re-call rate within the realm of normal? Am I helping to work with that customer to drive their average order value down? And if I'm not, should I engage with that customer on some exploratory conversations on how we can work better together to reduce the cost associated with maintaining equipments across their state?
Trey: Well, that's huge and obviously just cut to the chase if they want to get paid, I guess. I guess they have to follow your directive.
Mike: It's not just a question if they want to get paid, right. I believe that we should use data and analytics with our service contractors to do many things. We want to create competition. We want to drive a better performance. At the end of the day, we want to eliminate laggards. As I work with customers and I asked them, "Have you changed the contractors that you use for major service over the last five years?" If the answer is no, that's a red flag to me. I should constantly be looking at who does service within my locations and trying to drive efficiency and I do that two ways. I reward top performers. If I've got a contractor that's in my locations all the time and their group of technicians is doing a fantastic job for me in terms of the KPIs that matter to my business, I want to identify ways that I can give that contractor more business. Are there additional sites that I can have them do? Is there additional service within the sites that they're already doing that I have a gap in that I can ask them to become certified in and start doing that work? But along with rewarding top performers, I want to identify the contractors that aren't able to meet my service demands and I want to eliminate them. And last but not least across my estate. As I engage in this process, I will probably identify some gaps. I'll identify some pieces of equipment or some types of repair that my current contractor group doesn't have the skillset to repair within the KPIs that I've set for the operation. And then it's my job as the facility maintenance coordinator to determine do I have an existing contractor that does well somewhere else that I can engage with to take on that work or do I need to go to market and find a new contractor to bring into my fold.
Trey: So it's interesting, Mike, we're kind of approaching the end of our session. We're approaching that 20 minute mark. But before we end the podcast, I wanted to highlight your last part of your discussion. Sounds like you really drilled into best practices and if we have listeners that are trying to understand best practices so that they are emulating what other grocers have done versus skinning their knees doing it themselves. Do you and your team ever do best practice workshops? How do you educate grocers and listeners like those on the call?
Mike: Yeah, we absolutely do. So every organization, they're not in the same place in their life cycle and their goals and what they're trying to accomplish isn't the same, so we typically sit down with the customer and we try to anticipate or through conversation with them, what is it that they're trying to achieve in the coming year across their facility, maintenance and energy budgets, do they have capex that they want to spend to do building improvements? Is there brand image that needs to be improved across the estate or is just driving facility maintenance expense down and improving the uptime of equipment most critical to them? Based on those things, we like to use the data that they have and analytics to reevaluate their provider relationships. We like for any individual service area to not have one contractor that does all of the work. We would actually recommend splitting that work on a 50, 30, 20 or 60, 30, 10 ratio so that if a contractor starts to struggle or potentially falls down, you've got another contractor that's already familiar with your stores and your processes and that type of equipment. That can step in and then you should do continuous review in terms of the performance of those contractors and you evaluate the effectiveness on an annual basis and constantly make changes. It's just iterative process improvement.
Trey: So Mike, just so that we know, are these workshops something y'all charge for? Do you use them to engage and educate new prospects? How do you view those workshops?
Mike: So we've done them lots of different ways in the past. For the majority of our customers, we do what's called an annual health check. And in that annual health check, we evaluate all aspects of their business and that means aspects of their business that they're willing to engage with us on. There are some customers who feel that they've got their master services agreements in order and they don't need help there. We have other customers that feel that they're not ready to engage in master services agreements yet. And so they're still letting the vendor dictate the rules of engagement in terms of invoicing and what they charge and whether they do or do not have SLAs. But we typically try to meet the customer where they are. The good news is across more than dozens of customers using an application like ours through the years, we've got a pretty good concept of what good looks like and we're aggressive counsel in terms of pushing people towards a pack that will drive their facility maintenance expense down and reduce the unplanned downtime of the equipment that they manage.
Trey: Thanks Mike. That's fantastic. Appreciate your expertise and appreciate you joining the podcast today. Our listeners seem to be very engaged with your background and we look forward to having you again on the podcast.
Mike: Hey, I appreciate it Trey. There's one thing that I would really recommend. If I was a customer and I was starting on this journey, chances are I already have contractors that I'm engaged with today that I trust that do good work with me today. And my recommendation would be to ask two or three or five of these contractors to get together and have a shared think tank where you could talk about the best way to communicate goals, to gather contract data, and to start down a path of having master services agreements across all of the trades that your organization utilizes.
Trey: Appreciate the guidance and advice as always, we look forward to speaking to you again soon. Mike, thanks for the time.
Mike: Thanks for having me, Trey.
Trey: And to our listeners, tune in. We will be hosting Mike again, but as always, we want to make sure that we're representing your interests, so please email us with any subjects that you would like us to seek out an industry expert and we'll go do our best to address them on the podcast.