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TRANSCRIPT
Procurement Leadership Drives Value in
Outsourcing Corporate Services
Easy Wins:
Canon Business Process Services
Ted ArdeleanDirector, R&D Marketing
Ann Van AnneRegional Manager
sig.org/eval
Easy Wins: How Procurement Leadership Drives Value
through Outsourcing Corporate Services
Ted Ardelean
Anne Van Anne
2016 04 20
S e r v i c e
d e l i v e r y
• On-site, Off-site, Off-
shore processing
centers
• Six-sigma process
excellence
methodology
• Customized,
supplementing client
technology with
CBPS technology
S e r v i c e s
• BPO: AP, Claims
Process, Auto Fin, Cr
Card processing,
legal coding
• DPO: Imaging,
records management,
print, mail
• Office Services:
Reception, hospitality,
A/V, Admin Services
• Discovery: Physical,
digital, consulting,
technology
• Workforce: Material
Handling, Logistics,
Administrative
S u b s i d i a r y o f
C a n o n U . S . A . ,
a C a n o n G r o u p
C o m p a n y
5 , 0 0 0 p e o p l e I AO P To p 1 0 0
G l o b a l
O u t s o u r c i n g
L e a d e r 2 0 0 7 t o
2 0 1 5
4
About Canon Business Process Services, Inc.
Agenda
4
3
2
1
5
Trends in Corporate Services
Corporate Services Overview
Easy Wins
Spend control strategies and tactics
Lessons Learned and Q & A
5
Facility services are services related
to Space & Infrastructure and to
People & Organization.
IFMA
Corporate Services are the people-
interfacing activities within FM that
support all functions that produce the
product or service the company sells.
Aka: Office Services, Business
Services
6
OverviewHow we def ine Corporate Serv ices
7
OverviewCorporate Serv ices wi th in Faci l i t ies Management
FM, IFM, CRE
Corporate Services
Help Desk
Mail & Courier
S&R
Print (all)
Imaging
Records Mgmt
Reception
Switchboard
Day cleaning
Supplies Mgmt
House keeping
Shuttle
Logistics
Moves, Distribution
Vending
Trash Removal
Concierge
Food delivery
Conf R, AV, & Events
Life / Health / Safety
FM Operations
Buildings
Mechanical and
electrical
Heating and
ventilation
Building control
and systems
Fire protection
and alarm
systems
Energy
Water
Waste
Recycling
Property Mgmt
Property
acquisition,
leasing,
disposal
Asset Mgmt
Relocation
Fin Analysis
FM RecordsHR Support
IT Support
Finance &
Procurement
Support
Real Estate
Support
Records
Storage
Employee Svs Business Svc
FM Svs
Cleaning
Catering
Security
Laundry
Fin & Admin
Space planning
8
OverviewCorporate Serv ices ranks among top 3 indi rect categor ies
Source: Ariba 2015 Indirect Benchmark Survey
9
Overv iew
Workplace serv ices and Faci l i t ies serv ices most f requent ly
outsourced
Source: KPMG 2015 REFM Pulse Survey
OverviewModels for provid ing Corporate Serv ices
By location / region
In-house
Outsourced
Hybrid – some locations
in-house, some outsourced
Integrated FM (IFM)
10
New York
Missouri
Jacksonville
Atlanta
Chicago
“By 2020 the majority of employees will work
from home rather than a traditional
company office.”
Trends in Corporate Services
8% 40% 44% 6% 1%
0% 20% 40% 60% 80% 100%
Strongly agree Agree
Disagree Strongly disagree
Don't know
Source: Economist Intelligence Unit
Operational changes
• Analog to digital (less manual more intelligent
labor, digital work)
• More amenities, more people interfacing
services
Workforce changes
• Aging workers, knowledge loss
• Millennials – digital work, digital office
Workplace changes
• New workplace amenities
• Mobile work place – office, home, on the road
• Collaborative space
11
12
Trends in Corporate Services
• Mail +
• Print Room + Imaging +
• Records +
• Office Svc
• Digital Back Office
• Responsive business
• Competitive business
• 50% less Sq Ft
• 10% less staff
• 10% less supply costs
• 100% of spend under
control
• Few suppliers and contracts
• Standardized service and costs structure across
locations
• More flexibility in scaling up or down
• Improve efficiency and reduce cost in core
business operations
Integration of activities Value to FM Value to Core Business
Integrated FM (IFM) drives
consolidation of Corporate ServicesImpact beyond FM is expected
Example
13
Poll question
How are Corporate Services changing in your company?
• New amenities?
• Is work-life a strategy to attract workers and increase productivity?
• Is the company strategically moving to fewer but larger locations?
Spend control strategies
Integrate functions within Corp Services• Removes waste and duplication
E.g. When Office Services, Mail, Print, Records, Imaging,
Reception, S&R are consolidated
Let your data drive decisions
Outsource
Go digital
Use your six-sigma program to improve processTip: use service provider’s 6-sigma resources if you do not have your own
14
Tip: Data not available, ask a service provider for benchmark data
Spend control strategies
Partner or vendor relationship?
• Has a stake in your business and is
willing to create value
• Proactively improves in a measurable
way
• No investment or special care for your business
• Multiple vendors consume your time
• Lowest cost vendor may not provide the right service or
quality needed
Partner Vendor may create more work for you
15
Spend by Category
16
Spend control strategiesLeverage prov ider fo r cos t con t ro l where procurements cannot reach
Corporate Service costs can
be controlled through supplier
AnnualSpend $ Long tail of uncontrolled costs
Procurement watch
Category1 $
Gain category expertise(e.g. print, mail, records, imaging, office services -
sourcing, benchmarking, and negotiation)
Gain access to consortiums/group pricing
Corp Svc $ Category n $
Easy winsPrint -Mai l outbound
• Apply best-fit mail piece design – flat to
letter (fold)
• Optimize weight – combine 2 mailings into one,
duplex print
• Use flat letter instead of overnight parcel
• Target: customer service, print data center, HR,
AR Billing, Marketing, compliance
• Check mark-up on paper and envelope supplies
in vendor contracts
ActionMany organizations are not disciplined
about optimizing the mail piece
Using the wrong mail piece format can cost
20% to 30% more
Example• Change from flat to letter (fold). Every
1,000,000 pc saves $275,000 (2 oz weight
example)
• Reduce letter weight from 2 oz. to 1.0 oz. Every
1,000,000 pc saves $220,000
17
Easy winsReturn Mai l
Up to 20% of corporate mail is returned –
cannot deliver as addressed • Run address verification before mailing
• Update customer database with return mail to
prevent re-mailing to bad address next month /
period
• Target: customer service, print data center, HR,
AR Billing, Marketing, compliance
Action
18% of mail pieces have something wrong
with the address
Total cost of mail return ~ $3.00 per piece• 100,000 returned mail pieces = $300,000
18
19
Easy winsOff ice Pr int
• Assess office print cost
• Implement MPS Program in phases as the
printer/copier lease expire
• Consider “Print Buyer” concept
• Evaluate cost benefit analysis of a full-time or
part-time MPS Coordinator to maintain office
print strategy and policy continuously– Spread cost over the equipment maintenance
contract
– Insist on on-site staff not just remote monitoring
technology (sites with >100 machines)
Action
• Reduce or eliminate personal desktop printers
• All print purchases through the MPS Program
(linked to your supplies procurement system)
Update or issue policy
20
Easy winsCour ier Serv ices
• Freight Shopping Program – competitive, on-
demand best rate
• Review and update rates in systems every
quarter
• Is the fuel surcharge still on?
• Audit courier invoices.
• Evaluate cost benefit analysis of a full-time or part-
time analyst to manage courier invoices and recover
money
• Client example: a 2-Yr program recovered/avoided
$4 for every $1 spent on analyst
Action
• Default to 2-day guaranteed delivery or ground
delivery for items going to another company
location
• Educate employees about pricing and policy
Update or issue policy
21
Easy winsFree-up Expensive Off ice Space
Through imaging and records management
(RM) you can reclaim high-price office space
and reduce sq. ft.
Cost avoidance
Space freed by digitizing “project
repositories” (files) (10,000 sq. ft. @ $30 per square foot)
$300,000
Annual labor associated with
maintaining paper files$25,000
Reduced office size by 20% for 150
offices$900,000
TOTAL $1,225,000
• Digital records align with digital business strategy
• Complies with contract records preservation
requirements
• Aligns with corporate social responsibility
initiatives as “sustainable practice”
Ancillary benefits
22
Easy winsMove cont ingent workers into Outsourced Serv ice
• Reduce cost per position – Potential savings $3 to $7K per year per FTE
• Reduce co-employment risk
• Increase quality of workplace services and maintain process knowledge
• Cost reduction and control
• Standardized labor rates
• Predictable, transparent cost
• Easy to use program
• Reduced co-employment risk
• Time wasted with onboarding, training
• Long recruiting process
• Can’t get it right: right person when
needed
• Unpredictable production output
• Lower quality
• Program has a cost – legal, HR, Mgmt
time, IT Sys, MSP fee, lost productivity,
training, quality
• Focused on outcomes and production
not recruiting
• Requires longer term planning
• Training, supervision, work quality is the
supplier’s responsibility
• Requires partner not vendor
relationship
Procurement View of
Contingent Workforce Model
Business Mgr View Of
Contingent Workforce Model
Business Mgr View of
Outsourced Service Model
23
Take away
Strategic Sourcing has the expertise to align FM activities with company strategy
Cost of Corporate Services within FM may be reduced 20% by consolidating services
There is an opportunity to bring under control more of the otherwise uncontrolled cost
within FM
For the easy cost reduction opportunities within FM, Strategic Sourcing needs to rely on
the service provider when internal procurement resources are not available
Selectively moving contingent positions in FM to outsourced services can reduce cost,
improve outcomes, avoid co-employment risk. (Some clients realized $10K annual savings
per position)
Advancing Business Performance to a Higher Level
Thank [email protected]
Tel: 212-502-2122
www.cbps.canon.com
Questions
Employee Interfacing
• Help Desk
• Mail / Parcel Delivery
• CRD / Imaging Center Mgmt
• Food Service Delivery
• Concierge Svc (1)
• Office Supplies Management
• Pantry Refreshment Svc
• Conference Room Set-up
• Audio Visual Mgmt
• File Rm / Records Management
• Moves – Personal
Facilities Interfacing
• Courier Management
• Trash / Recycling
• Vendor Management (8)
• Security Program Services (2)
• Life Safety Program Services (3)
• Environmental Program (4)
• Interior Maintenance (5)
• Property Mgmt Support (9)
• FM Communications – Inclement
weather, power outage,
transportation
• Street, Tunnel Cleaning
ServicesSite
Logistics
“…make new
employees
productive day 1…”
Employee In
• Ready Office
• Facility
Orientation
• Print/copy,
phone, supplies
set-up
• Badge, keys
Employee Out
• Hardware
collection
• Badge/Key
retrieval
Warehouse / DC Store
Rooms (6)
Shuttle - People
Moves
Eqpt., Materials (7)
Shipping & Receiving
Dispatch and Customer
Service
Fleet Vehicles and
Eqpmt Mgmt
• Supplier Sourcing
• Spend Analyze &
Report
• Budget Mgmt
• Supplier Invoice –
review, resolve
vendor
discrepancy,
code, approve for
payment
• Contract
administration
Business Support
HR IT
• IT desk side
delivery and pick-
up
• Asset tagging and
inventory
• Print/copy
preventive
maintenance and
supplies
• IT Hardware
disposal
Procurement
Supply Demand Planning
Real Estate &
Lease Admin
• Lease abstracting
• Utility Accounts
Administration
• Document control
• Certificate
compliance
• Data entry &
Admin of Lease
Documents
• Invoice review and
processing
• Reporting
• Lease auditing
See next slide for detail
What does Corp. Services look l ike?
26
Corporate Services detai l
• Reception/
Concierge Desk
• ID Badge
• Intra-campus Transport
scheduling, help
• Off-campus Transport
scheduling, help
• Dry cleaning
• Special event set-up and
break-down
• Catering / Food Svc delivery
• Executive Services
Concierge
Services
• Physical Access
ID Badge Mgmt
• Oversight of building keys,
locks
• Escorting (facilities
vendors)
• Mail /parcel screening,
X-Ray
• Visitor screening
• Door position enforcement
• Alarm reset
Security Program
Services
• Emergency
evacuation
procedures
• First aid medical kit
maintenance
• Back-up power support
• Exit-Door light
maintenance
• Maintain passenger
equipment and compliance
• Training
• Fire alarm
Life Safety Program
Services
Materials
control
– collection, storage,
handling, disposal
• Recycling – plastic,
paper, toner,
electronics
• Shredding
• HazMat material
handling
Environmental
Program
• Office set-up,
paint, move
• Lights, doors, floors
Maintenance
• Project Management
Interior
Maintenance
Materiel Handling
• Receiving inspection
• Quality control
• Barcoding and stocking
• Damage/return processing
• Disposal
Kitting, Packaging, Assembly
Order Fulfillment / Pick-Pack
Order processing
Inventory Management
Warehouse/DC/Store
Room Operations
Coordinate vendor
services for
• Equipment maintenance and repair -
HVAC, UPS, Generator,
• Fuel logistics
• Vending services
• General repairs
• Paper, shredding, recycling, uniforms
• Administer user accounts of vendor
systems – Iron Mountain,
Office Max, etc.
Vendor
Management
• IT Hardware
• High value
equipment
• Lab materials/specimens
Specialty
Transport
• Coordinate lease related
services, maintenance and
repair requests
• Maintain parking assignments
• Maintain/control vendor access to
restricted areas – roof, security sys,
electrical panel, etc.
• Maintain FM / PM Documents, records,
Systems
– Certificates of Insurance current to
property schedules
– Preventive maintenance schedules
Property Management
1 2 3 4 5
6 7 8 9
27
Expected Spend on Ex is t ing/Upcoming Outsourc ing Contracts (Mean)
Q74: Please approximate how much you will spend with the outsourcing vendor over the term of
the contract.
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
28
4%
1%
16%
33%
38%
40%
44%
50%
51%
51%
54%
Don’t know
Other
Traditional consolidation service
Mobile SMS
Mobile application
Mobile web
Secure e-mail attachment
e-Mail body text
Digital mailbox
Physical mail
Our own website
0% 20% 40% 60%
Half of the companies depend on physical mai l and digi tal
mailroom (scanning) to del iver communications
Q19: Which of the following channels is your business using today for inbound and outbound
communication?
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
N = 240 business respondents in North America
Multiple
responses
permitted
29
27%
35%
39%
39%
42%
46%
46%
50%
62%
e-Document delivery
Fulfillment
Production mail/statement processing
Data integration into back-end business processes
Provides staff
Manages staff
Procures technology
Shipping and receiving
Scanning svcs
0% 10% 20% 30% 40% 50% 60% 70%
Mailroom Services Performed within Outsourcing Contract
Q72: What services does the document outsourcing vendor perform for the management of your mailroom
operation?
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
Multiple
responses
permitted
30
5% 5%
18%
20%21%
18%
13%
Mean: $5,742,200
Less than $250K $250 - $499K $500K - $999K
$1M - $4.9M $5M - $9.9M $10M - $19.9M
$20M - $49.9M $50M or more Don't know
Expected Spend on Scanning/Imaging over Contract Term
Q81: How much will you spend with the outsourcing vendor for document scanning and image capture over
the term of the contract?
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
N = 39 business respondents in North America who outsource document scanning/imaging
31
Only 14% of companies use automated data conversion
Q38: Which of the following statements BEST describes what is being done with scanned/imaged/indexed
documents?
35%
32%
14%
13%6%
Merging scanned paper, electronic documents, and datainto digital business process workflows
Digitizing documents for archiving purposes
Extracting information and data for introduction into abusiness process
Imaging for archival purposes and data extraction forintroduction into an ongoing business process
Don’t know
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
N = 198 business respondents in North America
32
Preferred Management of Capital Expenditures
Q100: How would you prefer capital expenditures for technology procurement to be handled within a
document outsourcing contract?
38%
26%
15%
12%
9%
Provider manages procurement and owns the equipment
We manage procurement process and own the equipment;the service provider manages the environment
Provider manages procurement, but we own theequipment
We manage parts of the procurement and own theequipment; provider manages other parts of procurementand owns that equipment
Don't know
Source: Service Expansion Opportunities for Document Outsourcing: North America, InfoTrends, 2012
N = 165 business respondents in North America who outsource (are considering outsourcing)
document process outsourcing
33
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Easy Wins:
Procurement Leadership Drives
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Ted Ardelean
Director R&D Marketing
Canon Business Process Services
631-672-6972 [email protected]