FM outsourcing

Services provided

Outsourcing the management and operation of the site’s utility plant

Benefits achieved

100+ improvement measures identified
Annual cost bene t of £700 - £900k

Summary

Kraft Foods are a leading food manufacture and are the number one brand in four categories; chocolate, coffee, gum and biscuits.

With global sales revenues of $45.2bn in 2010, 64 manufacturing sites and employing 24,000 staff in Europe alone Kraft own a number of well known food brands including Cadbury, Kenco, Toblerone, Planters, Oreo, Philadelphia and of course Kraft.

Kraft’s Banbury site manufactures coffee and employs approximately 2,000 staff.

Kraft wanted to investigate the opportunity to outsource the management and operation of their utility plant at the Banbury site in order to reduce costs and improve plant performance.

They also wanted to understand the nature of the opportunity in terms of its scale, benefits and of course the associated risks.

However, this had to be done without the knowledge of anyone outside of Kraft’s senior management team.

Scope

JRP Solutions were invited to investigate the opportunity for outsourcing the management and operation of the site’s utility plant the scope of which included:-

• CHP plant
• Refrigeration plant
• Waste heat boilers
• Effluent plant
• Steam boilers
• Air compressors

The utilities plant was managed by Kraft personnel but maintained by a combination of in house staff and a myriad of sub-contractors with whom no rates or KPI’s had been agreed and who were paid from various cost centres.

Identified Issues

A number of key issues were identified in four main areas; Procurement, Management, Operations and Technical Many of these issues had operational implications as well as a financial cost A selection of the key opportunities related to:-

• Management information systems
• Performance measures or monitoring
• The importance of a central budget for utilities
• Negotiation tactics for existing sub-contracted services
• Plans for developing a multi-skilling culture
• Staffing efficiencies
• Critical Plant Analysis and the development of an Asset Replacement Plan
• Accurate service loss measurement
• Site wide energy efficiency improvements
• Optimising M&T information
• Achieving a good Planned:Reactive Maintenance ratio
• Stock control of critical and non-critical parts

Results

At the conclusion of a 3 month investigation JRP identified over 100 improvement measures and projects across the four key functions.

The implementation of these improvements would result in an annual cost benefit of between £700 – £900k equating to approximately 15% of the total cost of utilities at Banbury.

Whilst these benefits could be achieved by an outsourced FM provider, the Kraft management team were of the opinion that a lack of in-house expertise and the prevailing organisational culture would result in only half of the identified cost savings being realised should an insourcing route be chosen.

Whilst the optimum financial value would, in this case, have been derived by adopting an outsourcing approach other organisational, company strategy and site specific elements needed to be taken into consideration and it was subsequently decided to implement the improvement measures through Kraft’s in-house team.

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