The document is about a presentation given at the 2012 Human Capital Conference on reviewing vendor management. The presentation discusses setting the scene by noting changes in the market and a need for more transparency and alignment. It covers ensuring transparency in costs and scope, aligning models with business needs, and considering options to improve processes. The conclusion recommends understanding real costs and services, actively managing vendors, and considering short- and long-term solutions.

1. 2012 Human Capital Conference
23–26 October
Managing vendors: is it time
t review your vendor
to i d
management?

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. Presenters
► Elly Parselle
y ► Kevin Griffin
► Tesco Stores Ltd ► Ernst & Young LLP (UK)
► elly.parselle@uk.tesco.com ► kgriffin1@uk.ey.com
Page 3 Managing vendors: is it time to review your vendor management?

4. Agenda
► Setting the scene
► Transparency
► Model alignment
► Business needs
► Conclusion
Page 4 Managing vendors: is it time to review your vendor management?

5. Setting the scene

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-house
Page 6 Managing vendors: is it time to review your vendor management?

7. Global mobility survey 2012: moving and
relocation 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 costs
Page 7 Managing vendors: is it time to review your vendor management?

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
Competitors
Page 8 Managing vendors: is it time to review your vendor management?

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. Growing number of support services
Education
support Insurance
Translation Moving
Preview trip Home search Pet moving
Lease
Serviced negotiations
Contract School search
property
Concierge
Spousal
Orientation
support
Career support Language
training
Cultural training
Local Property
registration management
Page 10 Managing vendors: is it time to review your vendor management?

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 methodology
Page 11 Managing vendors: is it time to review your vendor management?

12. Transparency

13. How transparent is your cost and scope?
Initiation = X
Quote
Movement
Invoice
Payment = Y
Page 13 Managing vendors: is it time to review your vendor management?

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 savings
Page 14 Managing vendors: is it time to review your vendor management?

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 used
Page 15 Managing vendors: is it time to review your vendor management?

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 all
Page 16 Managing vendors: is it time to review your vendor management?

17. Cost savings are achievable without a risk to
quality
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
achievable
Page 17 Managing vendors: is it time to review your vendor management?

18. Model alignment

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
issues
Page 19 Managing vendors: is it time to review your vendor management?

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 up
Page 20 Managing vendors: is it time to review your vendor management?

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 required
Page 21 Managing vendors: is it time to review your vendor management?

22. Business needs

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 dynamics
Page 23 Managing vendors: is it time to review your vendor management?

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
Define
Page 24 Managing vendors: is it time to review your vendor management?

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 arrangements
Page 25 Managing vendors: is it time to review your vendor management?

26. Conclusion

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 structure
Page 27 Managing vendors: is it time to review your vendor management?

28. Questions
Page 28 Managing vendors: is it time to review your vendor management?