accenture - happy clients profitable suppliers

‘HAPPY CLIENTS PROFITABLE SUPPLIERS’

Sezgin Kaya

Global Practice Lead

Accenture Operations – Procurement

Property and Facilities Management

Copyright © 2015 Accenture All rights reserved. 2

Accenture Procurement

Leading Procurement Shared Service Centre

Transformation Provider$10m+ R&D Budget for Sourcing & Procurement

Leading Innovation in above market

aggregation

Manage

$95bn+in annual spend

24+ yearsof BPO experience

120 BPO clients across a broad range of industries

and geographies

Process 9 million+ transactions annually

Procurement transaction

services in 56+ countries and

43+ languages

More than 18+ locations in Accenture

Delivery Network

11,000+ sourcing and procurement professionals combined in Operations, Strategy and Technology

3300+ Procurement Professionals in Operations

1120+ Source to Contract

experts

2180+ Procure to Pay (PtP)

specialists


• FM market growth will be impacted by a slow-down in new outsourcing

• The public sector FM market will remain tough• Control over costs will become ever more important• Fragmentation in contract structures continue• Increase in realising value from 'green FM' services• Increase in M&A - for those companies prepared to extend their

position in the market

Some Market Headlines in FM


• Pressure to cut costs.• Demand for simplification and standardisation of services• Internal pains – performance, productivity and retention of key

personnel.• War for talent – attracting the best employees• Deliver a great place to work, with an increased focus on

lifestyle of work, collaboration, cost of operations, flexibility, telecommuting and movement of people.

Key Market Pressures… still?


Industry Structure under Force-Field Analysis

INDUSTRY COST STRUCTRUE

Pressure to cut costs

More demanding customers

Increased competition, industry consolidation

Tough public sector

Saturated service integration

Increasing labour costs

More stringent regulations, unions, etc

War for talent- Performance- Productivity- Retention

Investment into technology to cater for automated building operations

Aging building stock

Eroding Profit Margins, Increasing Cost to Serve

Market Dynamics on Property and Facilities Management… Organisational Ability to match Business Needs with Market Capabilities

6

COMMERCIAL MANAGEMENT

FINANCE

OPERATIONAL

MANAGEMENT

‘Market CAPABILITY’ ‘Customer NEEDS’

POLICYINNOVATION

DELIVERY CONTROLS

Organisational ‘ABILITY’

I N S I D EO U T S I D E


The Key Attributes for Organisational Ability

• Profitable Suppliers, Happy Clients, or vice versa

• Right Price and Profit for the Purpose

Three key attributes of Organisational Ability to match the Market Capability to Business Needs

Innovation and Business Development


Profitable Suppliers, Happy Clients, OR Happy Suppliers, Profitable Clients…?

Positive Customer Experience: • Empowered leadership• Continuously improving • Operationally effective• Delighted Staff willing to work

related to: • Skills improved (ρ = 0.97)• Happy to work (ρ = 0.96)• Team Excellence (ρ = 0.93)

Service Excellence Research Framework, CFM

Research shows that satisfaction of service provider’s personnel (“Staff Delight”) has significant impact on achieving positive ‘customer experience’.

Businesses with higher employee engagement scores report 48% fewer safety incidents; 41% fewer patient safety incidents; and 41% fewer quality incidents. https://hbr.org/2013/07/employee-engagement-does-more/

Service Excellence, CFM


“What needs to emerge, and in some circles is emerging, is what I call a mutual economy that focuses on the needs of both the individual and the collective”. – Adam Smith – The Wealth of Nations

Right Price & Profit for the Purpose: Balancing Pricing and Profitability…

2.4%Fixed Cost

3.4%Volume

8.4%Variable Cost

11.9%Price

1% improvementin …

Creates operating profitimprovement of …

Comparison of profit levers

• Pricing is the biggest profit improvement lever, more effective at improving margin than increased sales or cost reduction.

• 1% increase in average prices lift operating profits by anywhere from 7-15%.

Source: Accenture Insights, 2014


…looking for flat spots on the Pricing and Volume curve…

Right Price & Profit for the Purpose: The balance between Price and Volume

Source: Accenture Insights, 2014

Price increases, with the same volume. E.g.: Doing more with the same resources on a single site.

Price increases, with the same volume. E.g.: moving out the redundant processes.


As the focus has shifted to working with fewer suppliers, it has become more important to forge long-lasting relationships and treat suppliers as Preferred Suppliers.

Right Price & Profit for the Purpose:Architecture of ‘Deal Making’.. How does a deal start?

Transactional Interaction

Tacit Coordination

Balanced Concerns

Relationship Building

Importance of Ongoing Relationship

Importance of Deal Terms

High

0High

Product & Commodity

Services & Processes

…hardly ever from scratch…

It may be that in some cases Suppliers can trade off relationship building with the deal terms.


• Do market capabilities match with needs?

• Are we jointly able to implement the best match?

• Happy Clients and Profitable Suppliers or vice versa.• Profit erosion and increasing cost base

• Profit v Volume : Business engagement and building relations

• “It is a long-term strategy”

A win-win scenario for Clients and Suppliers


Thank you!

Sezgin Kaya

[email protected]

Global Practice Lead

Accenture Operations – Procurement

Property and Facilities Management

mailto:[email protected]

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