DuPont Facilities Management Consolidates Responsibilities

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DuPont Facilities Management Consolidates Responsibilities

Aims to Reduce Total Cost of Ownership

In April of 2006 DuPont announced that the management of all office sites worldwide would be consolidated under the DuPont Facilities Services & Real Estate (FS&RE) organization.

“This move is one in a series of steps designed to reinforce the power of ‘One DuPont’ through consolidation of core competencies, leveraging best practices, and focusing on simplification and standardization of non-manufacturing facilities work processes,” says Judith Passwaters, global director of DuPont Facilities Services & Real Estate.

FS&RE is one of several functional organizations that support DuPont’s 18 strategic business units (SBU) across the globe. Prior to the announcement, FS&RE managed approximately 10 million sf of space, or about 50 percent of the total lab and office space in DuPont. Under the new policy, FS&RE is now responsible for managing all stand-alone office sites and about 70 percent of DuPont’s lab space. Excluded are DuPont offices that are an integral part of a manufacturing site, with the exception of sites where FS&RE has already agreed to manage specific non-manufacturing assets and activities on manufacturing sites.

The Power of One DuPont

Under the “One DuPont” initiative, launched in January of 2004, DuPont began to reduce its corporate complexity and to establish pockets of competency excellence. Rather than using different work practices at each site or within each business unit, “One DuPont” aims for global standardization, and adoption of best practices and common systems that can be shared broadly across the company.

Based on several Six Sigma projects, Passwaters concluded that a fragmented facilities operating approach, resulting in lack of sharing and leveraging best practices and systems, was costing DuPont far more than it should to operate the company’s portfolio of non-production assets.

“These projects confirmed that we have a significant opportunity to reduce operating costs, perhaps by as much as $50 million to $100 million annually, by consolidating management of the total portfolio of non-production assets versus the fragmented management approach that exists today,” she says. “Consolidating global office site management under a single organization is the first step in streamlining DuPont’s facility management process and cost accountability.”

To help identify specific improvement and cost saving opportunities, FS&RE contracted with Deloitte Consulting LLP in late 2005 to review DuPont U.S. and European non-production operations. During the 10-week assessment, three Deloitte consultants, led by George Bouris, worked on-site with the FS&RE team on a full-time basis.

Deloitte Six-Step Approach

Deloitte used what they call their “six-step project approach,” applying a well defined set of tasks requiring extensive interviewing, data compilation, and analysis. The first three steps involved an assessment of both internal and external factors, including a review of FS&RE’s vision, business direction, operating model and structure, assessing current work processes and corresponding software and data applications, as well as evaluating FS&RE operations as compared to external industry leading practices.

“At the end of step three, I felt we were too focused on technology and IT, and not focused enough on our business processes,” says Passwaters. “My concern was that if we did not have the right business processes in place, we would waste valuable time and money automating ineffective processes.”

Responding to this concern, Deloitte quickly revised the scope to focus more on business process deliverables in steps four, five, and six. In step four, Deloitte created an overview of FS&RE’s technology gap analysis and SAP capabilities. Step five involved a business process overview of issues and opportunities using an Enterprise Value Map (EVM) to link core business objectives with overall DuPont shareholder value. Finally, step six created a list of both near and mid-term opportunities for improvement.

Deloitte analyzed FS&RE’s four core business processes: Real Estate, Capital Projects, Facilities Management, and Operations Support. From this analysis Deloitte created what it terms a “Corporate Real Estate Industry Print” for each core business process. The Industry Print is a visual representation of industry-leading corporate real estate business processes and sub-processes and serves as an effectiveness matrix to illustrate specific areas of potential improvement.

According to Passwaters, in addition to this very helpful “gap analysis,” Deloitte helped FS&RE gain a better understanding of how their operations compared to best in class and competition through the use of an “Evolution of CRE Organizations” analysis. At the bottom of this four-tier matrix is an organization that is basically a task manager/order taker; the next level moves to being an advisor to the businesses; with the two highest levels being strategist and visionary, i.e., CRE organizations that actively participate in planning strategy and driving business decisions.

“The good news for us was that FS&RE had progressed beyond level one, order taker,” says Passwaters. “Our new goal is to reach the strategist level, where we are attuned to the needs of individual businesses and focused on proactively making real estate and facilities decisions that enhance business profitability.”

Business Improvement Recommendations

At the end of the 10-week project, Deloitte concluded that FS&RE’s strategies were well aligned with DuPont corporate direction, but not fully aligned with leading industry practice models. In order to improve FS&RE’s business processes and information technology framework, Deloitte recommended the following five initiatives be considered:

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Improve operating and service delivery models—(Near Term, 12 months) Restructure FS&RE’s operating model to effectively support a global organization; establish a clear, measured, global approach to real estate facilities service. (Mid Term, 12-36 months) Enable a “strategic partner” relationship between FS&RE and DuPont business units and functions; elevate the FS&RE leader position within the DuPont management structure.

Improve customer relationship management—(Near Term, 12 months) Design and implement a formal Customer Relationship Management (CRM) model; increase focus on stakeholder relationship and require CRMs to learn the business. (Mid Term, 12-36 months) Based on demonstrated CRM value add, require business units and functions to designate a liaison to engage FS&RE in strategic program and portfolio planning activities; establish a CRM working group to include SBU, Function, and FS&RE representatives.

Develop integrated information technology platform—(Near Term, 12 months) Develop and implement an interim information technology solution that supports critical measurement of portfolio statistics and total cost of ownership. (Mid Term, 12-36 months) Develop and implement a long-term information technology platform strategy; prepare for FS&RE’s rollout of SAP and implement aligned point solutions.

Optimize strategic portfolio planning—(Near Term, 12 months) Establish a strategic portfolio planning process. (Mid Term, 12-36 months) Develop and implement a global strategic portfolio plan and optimization strategy founded on DuPont business portfolio rationalization (business expansion, consolidation, or exit decisions).

Improve governance—(Near Term, 12 months) Formalize governance and oversight responsibilities of FS&RE with respect to global real estate and facilities asset transactions. (Mid Term, 12-36 months) Establish “governance” as the set of rules, procedures, guidelines, and conventions that shape the roles, responsibilities, relationships, behaviors, and decisions carried out within or on behalf of FS&RE.

These project recommendations have become the foundation for FS&RE’s Critical Operating Tasks (COTs) for 2006:

    • Reduce the total cost of ownership of DuPont’s real estate portfolio globally.

    • Gain recognition within the company as the center of competency for managing stand-alone non-production facilities, services, and real estate.

    • Build a business case for centered management of non-production assets and services on production sites.

“Our goal is to use annual COTs to drive the Deloitte recommendations and position FS&RE to assume greater, value-adding responsibility in all regions in which DuPont operates,” says Passwaters.

Lessons Learned

“Aligning your organization’s objectives with corporate vision and direction is essential,” says Passwaters. “Continually clarify and communicate what your organization is doing in support of where the company is trying to go.

“Once you have established your organization’s vision and strategies, make sure that you communicate them to every person in your organization,” she continues. “This is especially true for corporate support organizations, such as FS&RE, that serve a diverse group of internal customers. Find those businesses and functions in the company that are looking for help and jump in and prove you can deliver results quickly …. then word begins to spread!”

Passwaters also advocates using external benchmarking and Six Sigma, and working with third-party consultants such as Deloitte to add credibility to recommended strategies.

“Having specific recommendations from Deloitte helped us find the traction we needed for change,” says Passwaters. “Application of the Six Sigma methodology adds structure, order, and clarity to the process of data collection, analysis, and measurement.”

Passwaters would like to acknowledge and thank the Deloitte team, in particular George Bouris, Francisco Acoba, and Tim Flint for their invaluable assistance on the DuPont-Deloitte project.

By Amy Cammell