Procurement as a Growth Engine

View This Article in BOSS Magazine

North America’s largest minority-owned facility management firm is reimagining this critical function. Here’s how SBM Management Services does it.

In the post-pandemic environment, more and more businesses are giving once-pigeonholed functions a well-deserved seat at the leadership table. Procurement has been shedding its reputation as a predominantly transactional department and is taking its rightful place as a critical business driver. By focusing the procurement lens on safety, technology, institutional knowledge, and fresh approaches to client service, North America's largest minority-owned facility management company is racing towards an exciting future – and that’s very good news for the discipline.

SBM Management Services provides custodial and facility soft services in general and critical environments for more than 1,000 sites globally. With clients across the United States and Puerto Rico, Costa Rica, Malaysia, and Singapore. SBM’s workforce consists of over 13,000 professionals, who deliver comprehensive site support services to a Fortune 500 client base.

Being precise and deliberate about decision making in a procurement organization doesn't happen by accident, nor does shifting from a pure purchasing department to become a true procurement business integrator supporting across all business functions. Take the company’s safety record, for example.

Michael Sander

SBM’s safety performance speaks for itself, with safety incident rates that are three to four times lower than industry averages. The company’s focus on safety is seen as a primary reason for SBM’s low employee turnover, and company growth as it lays the foundation for business excellence through fostering a culture of process discipline and employee engagement. “Safety is not just a priority but a core value for the company, and where all departments align to collectively support a top company objective; we are doing a fantastic job across the board,” Michael Sander, the company’s senior vice president of procurement, told BOSS. According to EHS Today, those results have earned SBM a place among America’s Safest Companies in 2014 and 2021. They are also the first and only janitorial company to have achieved the prestigious OSHA VPP STAR certification.

With over 25 years of supply chain experience, Sander develops and implements commodity and supply chain strategies to deliver value for the company’s clients. His team collaborates across the organization and with supply chain partners to deliver safe and effective product and service offerings.

SBM uses a data-driven approach towards solving client needs, leveraging an internal tech stack with AI-supported client system integration to share analytics, performance metrics, and client support activities. Through performance audits and photos, SBM’s AI tools assess and measure facility cleanliness to determine areas that require additional support. “Clients may not anticipate a custodial-based company using AI to this level, however, it's been fantastic to see the first of its kind solutions SBM has been able to develop to support clients,” Sander said.

SBM is also introducing AI through procurement vendor solutions, including contract life cycle management processes. One of the first deliverables of Sander’s group was to onboard a platform to manage over 6,000 contract life cycle agreements previously stored in across multiple systems. The adoption of a new client life cycle management system with AI technology has been truly transformative.

SBM’s procurement team performs many standard functions such as category management, vendor management, and purchasing support, in addition to providing dedicated procurement support for new client transitions due to the company’s rapid growth. The team also manages the activities of Specialized Supply (S2), a standalone company that acts as a dedicated marketplace for consumables. SBM negotiates rates and discounts for any of the products and services needed to support diverse facilities. “The solution also builds into our tech stack as a value-added service,” he said.

We're not just the best custodial provider, we have a significant gap between our company and what I would call a ‘near-peer' competitor. SBM offers a distinct advantage in the level of service and innovation, especially when compared larger companies in this industry.”

That environment, he stressed, is not one that's focused on safety, technologically driven support, or the same level of service quality that SBM is known for.

Before Sander joined SBM, the procurement group lacked vendor-supplied data sources; they also didn’t have prepositioning stocks to support their growth. In addition to zeroing in on those key elements, Sander’s procurement team targeted ESG goals such as vendor diversity. “SBM and S2 are both diverse owned companies and we wanted to make sure that we were supporting other small businesses and companies with diverse ownership.”

A new partnership with a California-based, minority-owned temp service agency reflects that commitment. “When I arrived, we were working with 16 different temp agencies,” Sander recalled. “We centralized most of that scope with Just Facilities, a company providing exceptional service across many of our West Coast sites. It didn't make sense that we hadn’t explored scaling their service to streamline and standardize our nationwide activities.” The partnership has been exceptional, and both companies have benefitted from the enhanced partnership and growth. In support of SBM, Just Facilities’ reach has expanded into several other states over the past year.

Partnerships are key when assessing the value chain for organization. While SBM works with more than 800 vendors, the team focused on key partnerships to overcome some of the biggest challenges. When it came to the large equipment often used in facilities management, the procurement team narrowed in on key provider attributes and whittled the vendor list from double digits to two primary partners for support. The consolidation resulted in better and longer warranties, enhanced support, reduced product variation, and an overall improvement in SBM’s ability to move quickly and scale the company. “Our partner vendors are more willing to bring in extra inventory or move mountains for short notice demands,” Sander said. “These partnerships have enabled transparent information sharing and more proactive planning, allowing us to look further upstream in the supply chain. Where we had lead times of eight months for some equipment, it is now stocked and available to us on demand.”

When a recent new client, a large Bay Area tech company, gave SBM one week’s notice to initiate service, vendor partners jumped right in. “Our success was made possible because we avoided long lead times thanks to partnerships with companies committed to finding solutions that work for both of us.” He added, “If we hadn’t done these types of activities proactively, we couldn’t have supported the growth we've experienced over the last year.

“We’re going to grow procurement as a business integrator, engaged in all activities on the front end, identifying additional business opportunities,” he concluded. “Not only savings opportunities, but also developing client solutions and staying embedded in every process and business decision throughout SBM.”