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EY Human Capital Conference 2012: Global Employee Mobility - Managing vendors: is it time to review your vendor management?

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This presentation considers the changing market and business drivers relating to global employee mobility and how to establish the right requirements to assist with vendor selection for employee relocation.

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EY Human Capital Conference 2012: Global Employee Mobility - Managing vendors: is it time to review your vendor management?

  1. 1. 2012 Human Capital Conference23–26 October Managing vendors: is it time t review your vendor to i d management?
  2. 2. Disclaimer► Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US.► This presentation is ©2012 Ernst & Young LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or LLP reproduction distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party.► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP LLP.Page 2 Managing vendors: is it time to review your vendor management?
  3. 3. Presenters► Elly Parselle y ► Kevin Griffin ► Tesco Stores Ltd ► Ernst & Young LLP (UK) ► elly.parselle@uk.tesco.com ► kgriffin1@uk.ey.comPage 3 Managing vendors: is it time to review your vendor management?
  4. 4. Agenda► Setting the scene► Transparency► Model alignment► Business needs► ConclusionPage 4 Managing vendors: is it time to review your vendor management?
  5. 5. Setting the scene
  6. 6. Setting the scene► Market has changed — assignment length, talent g g g , management, vendors merging► Corporations more accountable for external expenditure p p and 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-housePage 6 Managing vendors: is it time to review your vendor management?
  7. 7. Global mobility survey 2012: moving andrelocation feedback► 1,119 companies across 56 countries , p► Cost management remains a clear priority► 38% tighter vendor/supplier management to reduce mobility costs► 58% high p g priority, 70% more focused on the cost drivers y, for the next 12 months► One- to three-year assignment still most common — relocation and moving significant cost► Only 18% accurately measure costsPage 7 Managing vendors: is it time to review your vendor management?
  8. 8. Cost considerations Generic policy G i li Layers Points of contact Internal support External support Exceptions p Bugdets Coverage Scope required Industry Company culture Vendors Growth CompetitorsPage 8 Managing vendors: is it time to review your vendor management?
  9. 9. Components in question Relocation Moving Insurance ► Is the service ► Do you have full ► Are you paying provision transparency of too much for appropriate for your costs, and insurance, and your business are they what does it and assignee relevant to your really cover? needs? global coverage?Page 9 Managing vendors: is it time to review your vendor management?
  10. 10. Growing number of support services Education support InsuranceTranslation Moving Preview trip Home search Pet moving Lease Serviced negotiations Contract School search property Concierge Spousal Orientation supportCareer support Language training Cultural training Local Property registration managementPage 10 Managing vendors: is it time to review your vendor management?
  11. 11. Short-term versus long-term objectives► Review of contract terms► Review of service versus cost► Go to market — request for proposal (RFP) structuring to implementation► Case-by-case analysis to ensure transparency y y p y► Policy alignment for service criteria Key — understanding moving and relocation methodologyPage 11 Managing vendors: is it time to review your vendor management?
  12. 12. Transparency
  13. 13. How transparent is your cost and scope? Initiation = X Quote Movement Invoice Payment = YPage 13 Managing vendors: is it time to review your vendor management?
  14. 14. Make up of an international move 1 Origin 2 Transport 3 Destination Reality — up to 60 elements to influence the price — insight required to achieve true cost savingsPage 14 Managing vendors: is it time to review your vendor management?
  15. 15. Do you know what you are getting? ►Real insurance cost Text ►Survey Purchased ►Final volume ►Packing versus ►Bill of lading ►Delivery received ►Packing days ►Crates usedPage 15 Managing vendors: is it time to review your vendor management?
  16. 16. Transparency uncovered Agreed Individual Competitive A quote B bid C contracted 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?► How do I benchmark correctly?► Multiple opportunities for prices to change► Moving, insurance and relocation – one profit fits allPage 16 Managing vendors: is it time to review your vendor management?
  17. 17. Cost savings are achievable without a risk toquality Lift vans/crates — Volume quoted Insurance fee can Management fees reuse can add Invoice received be 20% of total or coordination 10%–15% on 30% variation move cost fees? p further shipments Paying for y g Overuse of Rebate and relocation packing days Acceptable claims commissions services — what drives origin costs ratio common 5%–15% can be delivered up in country? Average move Cost relationship Service Level , claim is €500, moving, insurance, g, , What is a school Agreements (SLAs) average excess is relocation, 20% + search? involve €500 cost savings layers achievablePage 17 Managing vendors: is it time to review your vendor management?
  18. 18. Model alignment
  19. 19. Alignment and value for money drivers► Instructed service provision by country p y y► Cost of services per location, country and region against scope versus standardizing p 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 issuesPage 19 Managing vendors: is it time to review your vendor management?
  20. 20. Vendor management alignment Change management process Process Policy Cohesive model: ► Defined end-to-end process ► Well-defined support model with clear responsibilities and Support Vendor services ownership ►A Appropriate and proactive i t d ti third party providers ► Transparent price and scope Growth Knowledge ► Controls in place Current model? Proposed future state? ► Compartmentalized ► Coherent ► Disjointed ► Joined upPage 20 Managing vendors: is it time to review your vendor management?
  21. 21. An efficient model?► The need to be close to the service provision creates p greater transparency, service provider accountability and price efficiencies. Client Actual scope required, p q , service delivered, cost contract suitable Key Performance Indicators /SLAs Home International Language/ Serviced search/school household Orientation cultural training accommodation search goods Delivered locally or globally as requiredPage 21 Managing vendors: is it time to review your vendor management?
  22. 22. Business needs
  23. 23. Options for improvement► Review of model that best suits business needs► Consult with internal stakeholders► Understanding the pros and cons for each model► Understanding policy► Outsource elements of service requirement► Understanding country dynamicsPage 23 Managing vendors: is it time to review your vendor management?
  24. 24. Process improvement: insight Analyze Outcome: ► Identify appropriate service scope by location ► Highlight if and where the current Gather relevant information: service cost is higher than ► Policy documentation expected ► Vendor directory ► Identify any areas where grouping ► Vendor invoices services would generate cost savings ► Assignee population by country ► Suggest suitable, robust service ► Supporting documentation delivery measures for the services ► Services instructed breakdown being offered ► Services provided breakdown ► Identify the best vendors to deliver the required services ► Enhancement of knowledge by bringing transparency to the end- to-end process and costs Review DefinePage 24 Managing vendors: is it time to review your vendor management?
  25. 25. What really matters? Requirements Status Items for review Phase 1 ► Internal and external support pp ► Essential ► Transparency ► Policy alignment ► Pre-assignment briefing clarity ► Stakeholder buy-in Phase 2 ► Full RFP process ► Desirable ► Cost-of-living awareness ► Greater internal knowledge ► Supporting documentation confirming costs ► More frequent meetings with vendors Phase 3 ► Budget realignment ► Consideration ► Influence of company culture on relocation experience ► Internal HR time allocation ► Local versus expatriate benefits ► Serviced accommodation arrangementsPage 25 Managing vendors: is it time to review your vendor management?
  26. 26. Conclusion
  27. 27. 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 structurePage 27 Managing vendors: is it time to review your vendor management?
  28. 28. QuestionsPage 28 Managing vendors: is it time to review your vendor management?

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