ey human capital conference 2012: global employee mobility - managing vendors: is it time to review...

2012 Human Capital Conference23–26 October

Managing vendors: is it time t i dto review your vendor management?

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► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP

Managing vendors: is it time to review your vendor management?

those of Ernst & Young LLP.

Presenters

► Elly Parselle ► Kevin Griffiny► Tesco Stores Ltd► [email protected]

► Ernst & Young LLP (UK)► [email protected]


Agenda

► Setting the scene► Transparency► Model alignment► Business needs► Conclusion


Setting the scene

Setting the scene

► Market has changed — assignment length, talent g g g ,management, vendors merging

► Corporations more accountable for external expenditure p pand maintaining compliance

► Numerous relocation options available — who to contract with?

► Not enough transparency — service versus cost► Ensuring right service levels are in place to reveal vendor

performance► Leaner resource/budget — less expertise in-house


Global mobility survey 2012: moving and relocation feedbackrelocation feedback

► 1,119 companies across 56 countries, p► Cost management remains a clear priority► 38% tighter vendor/supplier management to reduce► 38% tighter vendor/supplier management to reduce

mobility costs► 58% high priority, 70% more focused on the cost drivers g p y,

for the next 12 months► One- to three-year assignment still most common —

relocation and moving significant cost ► Only 18% accurately measure costs


Cost considerations

G i liGeneric policyLayersPoints of contactInternal supportExternal supportExceptionspBugdetsCoverageScope requiredScope requiredIndustryCompany cultureVendorsVendorsGrowthCompetitors


Components in question

Relocation► Is the service

Insurance► Are you paying

Moving► Do you have full► Is the service

provision appropriate foryour business and assignee

► Are you paying too much for insurance, and what does it really cover?

► Do you have full transparency of your costs, and are they relevant to yourand assignee

needs?really cover?relevant to your

global coverage?


Growing number of support services

Moving

Educationsupport Insurance

Translation

Preview trip Home search

Moving

Pet moving

Translation

Serviced property Contract School search

Lease negotiations

Spousal

property

ConciergeSpousal support Orientation

Language training

Career supporttraining

Local registration

Cultural training

Property management


Short-term versus long-term objectives

► Review of contract terms► Review of service versus cost► Go to market — request for proposal (RFP) structuring to► Go to market request for proposal (RFP) structuring to

implementation► Case-by-case analysis to ensure transparencyy y p y► Policy alignment for service criteria

Key — understanding moving and relocation methodology


Transparency

How transparent is your cost and scope?

Initiation = X

Quote

Movement

Invoice

Payment = Y


Make up of an international move

Origin1 Transport2 Destination3

Reality — up to 60 elements to influence the price — insight required to achieve true cost savings


Do you know what you are getting?

PurchasedText

►Real insurance cost►Final volumePurchased

versusreceived

►Survey►Packing►Delivery

►Final volume►Bill of lading►Packing days►Crates used


Transparency uncovered

Individual quoteA Competitive

bidBAgreed contracted priceC price

► How is the quote made up, and is the price fair?

► Which parties are involved in the service delivery?

► What additional confirmation is needed?► What additional confirmation is needed?

► How do I benchmark correctly?

► Multiple opportunities for prices to change

► Moving, insurance and relocation – one profit fits all


Cost savings are achievable without a risk to qualityquality

Volume quotedInvoice received30% variation

Insurance fee can be 20% of total move cost

Management fees or coordination fees?

Lift vans/crates —reuse can add 10%–15% on further shipments

Paying for Overuse of

p

Rebate and commissions common 5%–15%

y grelocation services — what can be delivered in country?

Overuse of packing days drives origin costs up

Acceptable claims ratio

Average move claim is €500, What is a school

Service Level Agreements (SLAs)

Cost relationship moving, insurance, ,

average excess is €500

What is a school search?

Agreements (SLAs)involve layers

g, ,relocation, 20% + cost savings achievable


Model alignment

Alignment and value for money drivers

► Instructed service provision by countryp y y► Cost of services per location, country and region against

scope versus standardizingp g► Geographical spread of assignment locations► Review of traffic lane volumes for efficiencies

(contractually)► Layers involved in service delivery► Frequency of policy exceptions and service delivery

issues


Vendor management alignment

Change management process

Process

Cohesive model:

Policy

Cohesive model:► Defined end-to-end process► Well-defined support model

with clear responsibilities and ownership

► A i t d ti

Support Vendor services

► Appropriate and proactive third party providers

► Transparent price and scope► Controls in placeGrowth Knowledge

Current model?► Compartmentalized

Proposed future state?► Coherent► Compartmentalized

► Disjointed► Coherent► Joined up


An efficient model?

► The need to be close to the service provision creates pgreater transparency, service provider accountability and price efficiencies.

Client

Actual scope required,p q ,service delivered, cost

contractsuitable Key Performance Indicators /SLAs

Home search/school Language/ International

household Orientation Serviced search/school search cultural training household

goods Orientation accommodation

Delivered locally or globally as required


Delivered locally or globally as required

Business needs

Options for improvement

► Review of model that best suits business needs► Consult with internal stakeholders ► Understanding the pros and cons for each model► Understanding the pros and cons for each model► Understanding policy► Outsource elements of service requirement► Outsource elements of service requirement► Understanding country dynamics


Process improvement: insight

AnalyzeOutcome:► Identify appropriate service scope

by location► Highlight if and where the current

service cost is higher thanGather relevant information: service cost is higher than expected

► Identify any areas where grouping services would generate cost savings

Gather relevant information:► Policy documentation► Vendor directory► Vendor invoices► Assignee population by country

► Suggest suitable, robust service delivery measures for the services being offered

► Identify the best vendors to deliver the required services

► Assignee population by country► Supporting documentation► Services instructed breakdown► Services provided breakdown

the required services► Enhancement of knowledge by

bringing transparency to the end-to-end process and costs

Review

Define


What really matters?

Requirements Status

Phase 1 ► Internal and external support

Items for review

► Essential pp

► Transparency► Policy alignment► Pre-assignment briefing clarity► Stakeholder buy-in

Phase 2► Desirable

► Full RFP process► Cost-of-living awareness► Greater internal knowledge► Supporting documentation confirming costs► More frequent meetings with vendors

Phase 3► Consideration

► Budget realignment► Influence of company culture on relocation experience► Internal HR time allocation► Local versus expatriate benefits► Serviced accommodation arrangements


Conclusion

Conclusion

► Deep experience required in understanding real costs and services

► Benefit to understand moving and relocation methodology► Case for active management/governance of vendors ► Consider shorter- and longer-term solutions► Understanding the value of model alignment for the

mobility structure


Questions
