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Financial Contributions from a Shared Services Procurement Organization
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Transcript of Financial Contributions from a Shared Services Procurement Organization
Financial Contributions from a Shared Services Procurement Organization
March 2011
2
A service company supporting essential infrastructure, property and industryA service company supporting essential infrastructure, property and industry
Values of safety, integrity, outstanding customer service, teamwork and open communicationValues of safety, integrity, outstanding customer service, teamwork and open communication
43,000 people with $3.6 Billion in revenue. Record financial performance, highly diversified and stable business model
43,000 people with $3.6 Billion in revenue. Record financial performance, highly diversified and stable business model
SectorsWater & Wastewater, Power, Defense, Communications, Transport (road & rail),
ServicesDesign, Engineering Construction, Operation, Maintenance, Asset Management
SectorsMining, Oil & Gas, Chemicals, Mineral Processing
ServicesProject Management, Engineering, Construction, Asset Management,Industrial Service
SectorsRail -Passenger -Freight-Infrastructure
ServicesDesign, Manufacture, Maintenance, Asset Management Refurbishment
SectorsCorporate, Education, Industrial, Retail and Government Sectors
ServicesCorporate Real Estate, Facilities Management, Project Management, Procurement, Finance & Accounting
UGL Limited (ASX:UGL)
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Finance & Procurement
• Overview UGL Ltd and UGL Services
• Overview UGL Services Procurement
• Procurement Evolution
• Procurement Initiatives: Impact on financial results
–Cost Savings
–Increase Sales
–Improve Productivity
–Manage Risk
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Back Office Support: Shared Services at a Glance
VP SSC
Payroll BenefitsPayment Services
Purchasing
Credit/Collections
CustomerInvoicing
Work
Control
73 FTE’s
SSC Cost per Revenue $
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
FY01 FY02 FY03 FY 04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
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SSC Purchasing Services
• National ContractsNational ContractsNational ContractsNational Contracts
• EEEE----Procurement: Procure PlusProcurement: Procure PlusProcurement: Procure PlusProcurement: Procure Plus
• Vendor Vendor Vendor Vendor OnboardingOnboardingOnboardingOnboarding
• Supplier PerformanceSupplier PerformanceSupplier PerformanceSupplier Performance
• Subcontractor complianceSubcontractor complianceSubcontractor complianceSubcontractor compliance
Director ProcurementServices
Procurement SystemsManager
Commodity Manager
Commodity Manager
Compliance ClerkVendor On-boarding
Administrator
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Purchasing and Finance: Key Initiatives
Initiatives Co
st
Sav
ing
s
Eff
icie
nc
ies
Man
ag
e R
isk
Incre
ase
Re
ve
nu
es
Strategic Sourcing X
E-Procurement X X
Vendor Management System X X X
Telecom Initiiative X X
Procurement Card Program X X
Compliance Program X X
Green Initiatives-TradeShows X X
Green Initiatives-Product Innovation X X
New Contract Startup Process X X
Diversity Programs X X
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Procurement Initiatives Timeline
Formed SSC Procurement
Focus on National Contracts MRO
Eprocurement 1st Try
Eprocurement 2nd Try Success
Green Initiatives_Supplier Trade Shows
Vendor Management System
Vendor Risk Management
National Contracts Services
2001 2011
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Procurement and Finance: Strategic Sourcing
• Phase 1 ($ Spend under Contract)
– Janitorial and Industrial Supplies
– Uniforms
– Promotional Items
– Office Supplies
• Phase 2– Waste Management
– Pest Control
– Roofing
FY Annual Savings ($MM)
Note
$390
$657
$1,402
0
200
400
600
800
1000
1200
1400
1600
2008 2009 2010 2011
Note: In 2009, metric was changed to hard savings only
Initiatives Co
st
Sav
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s
Eff
icie
nc
ie
s Ma
nag
e
Ris
k
Incre
ase
Re
ve
nue
s
Strategic Sourcing X
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Strategic Sourcing(cross functional team – critical)
Strategic Sourcing follows a rigorous seven step process; activities in each step are tailored to the nature of the commodity and thesupply market.
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Savings/Benefits Documentation
Baseline Method (hard savings) – agreed to with our internal client
• The baseline cost for items/services to be bid must use one of the following Baseline Methods (listed in order from most preferred method to least preferred):
– Purchase price of same/similar item within the last year (may need to be adjusted by a price index)
– Alliance pricing from existing contract
– Unsolicited bid for same item within the last year
– Budget estimate
– Supplier budgetary estimate
– Engineering estimate
– Alternate method specific to bid (i.e. the difference between incumbent bid and selected supplier)
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Finance and Procurement E-Procurement
• Overview– 849 Buyers throughout North America
– 11Punch Out Suppliers
– 29 Supplier Catalogues on Procure Plus
• Financial Benefits– View of pipeline for forecasting purposes
– Validation of contract pricing
– Ease of ordering prevents maverick behavior
– Invoices come in faster resulting in timely recording of expenses
Initiatives Co
st
Sav
ing
s
Eff
icie
nc
ie
s Ma
nag
e
Ris
k
Incre
ase
Re
ve
nue
s
E-Procurement X X
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Procurement and Finance: E-Procurement
UGL Services Unicco Operations
Percent of Purchasing transactions following guidelines
PSG
Total Transcations
Over $1k 221
Under $1k 2790
3011
Transactions following policy/guidelines
Over $1k 183
Under $1k 2670
2853
Overall performance against Guidelines
Percent following guidelines 95%
Goal 1 90%
PSG/DO - Paul Henry GULFSTREAM - ADMIN ALLTEL 1
GULFSTREAM - ADMIN Total 1
GULFSTREAM - AUTO RIVETOR Industrial Tooling Sales Inc 1
GULFSTREAM - AUTO RIVETOR Total 1
GULFSTREAM - FAC EQUIP Autronics Corporation 1
GULFSTREAM - FAC EQUIP Total 1
GULFSTREAM - FAC OPERATIONS Hagemeyer North America Inc 1
Republic Waste Services of Sav 3
Southland W aste Systems of Bru 1
UGL Services Unicco Operations
Purchasing Compliance
Opportunities to potentially use P-Cards
PSG
Oct-06
Count of Invoice Number
Mailing Name Total
Patent Construction Systems 7
Culligan Water Services 6
Nextel Communications 6
Republic Waste Services of Sav 5
W.W. GRAINGER, INC. 5
Cummins Northwest, Inc. 4
Volt Management Corp 4
Applied Air Technology 3
Enrique de la Guardia, MD 3
Purchases Out of Compliance
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Procurement and Finance: E-Procurement
Vendors on line catalogue with picture of item
“prevents order errors thus reduces returns/credits”
Examples of recent support and added value •Demonstrating via webx for any request (e.g. Bid and Reverse AuctionTool)
•Revised approval process for routing PO Change
•Designed the Capital Approval process to meet our policy
•Outreach to UGL Services for input to Road Map
•Bi Weekly status meetings
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Procurement and Finance: Telecom
Cost Savings
– Net annual - $770,000 – Carrier contracts
– Pooling
– Right sizing plans
– Cleanup– Zero use
– Texting
– Excess data use
– 411
Efficiencies/Integrated Mobile – 24/7 support line
– Maintenance
– Purchase
– Blackberry/Email Approvals
– Web Ordering
– Back Office
– One Invoice per vendor per month
– Integrated Accounting
Initiatives Co
st
Sav
ing
s
Eff
icie
nc
ie
s Ma
nag
e
Ris
k
Incre
ase
Re
ve
nue
s
Telecom Initiiative X X
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Procurement and Finance: Pcard Program
• Procurement Card– 885 Cardholders– $15M Annual– 91,000 Transactions annual– $171,000 Rebate Annual– $100,000 Sign on Bonus– AP Savings – 2.5 Headcount
• Travel Card– 550 Cardholders– $2.2M Annual– $25,000 Rebate
• Ghost Cards– 28 Vendors– $5M Annual Spend– $55,000 Rebate
• Controls– Limits– Monthly Reporting– Spot Audits– BOA Fraud Dept
Growth of Pcard Transactions
10,000
15,000
20,000
25,000
30,000
Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111
Pu
rch
ases
0%
10%
20%
30%
40%
50%
% o
f T
ota
l A
P T
ran
sacti
on
s
Pcard Volume Pcard as % of AP Transactions
Initiatives Co
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Sav
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s
Eff
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Incre
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Re
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Procurement Card Program X X
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Procurement and Finance: Vendor Mgt System
• Web based self service for suppliers and internal buyers
– Interfaced to ERP
– Self registration : Suppliers in Waiting
– Sophisticated search tools
– Location
– Diversity
– Capabilities
– Geographic coverage
– Suppliers can self manage their ongoing information
– Service capabilities
– Remit addresses
– Compliance documents
– CONTACT information !!!!!!!!!
– Vendor Management and Compliance
– Building ability to track vendor KPI’s
– Ability to record vendor performance
– Report on missing documents and insurance expiration
– Ability to screen capabilities before making the investment in contact
Initiatives Co
st
Sav
ing
s
Eff
icie
nc
ie
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nag
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Ris
k
Incre
ase
Re
ve
nue
s
Vendor Management System X X X
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Finance and Procurement/Efficiencies
Insert Geographic coverage picture
Procurement and Finance: Vendor Mgt System
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Procurement and Finance: Vendor Compliance
• Problem– Growth in Services E2E brings a challenge to manage risk
– CRE
– Maintenance
– Customers looking to shift risk from their corporation to service providers
• Solution: Systemically Track Documents using VMS– Certificate of Insurance
– Manage risk and exposure
– Insurance requirements vary by service type
– Sub contractors required licenses
– Supplier Diversity Certificates– Manage certificates by expiration and type
– W-9_USA– Validate all USA vendors W-9 against IRS database
– WSIB_Canada– Workplace Safety and Insurance Board (Certificate of Clearance)
Initiatives Co
st
Sav
ing
s
Eff
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nc
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Ris
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Incre
ase
Re
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s
Compliance Program X X
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Procurement and Finance: Sustainability and Social Responsibility
• Green Programs–Certification
–Green supplies and equipment
–Innovation
–Tradeshows and Training
–Diversity Program
–Policy
–Reporting
Initiatives Co
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Inc
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Re
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nu
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Sustainabilty and Social Responsibility X X
Green cleaning can play a key role in facilities maintenance, where a clean, attractive, healthy work environment is essential in attracting and retaining customers and occupants.
Green Cleaning means the use of products and services that have a lesser or reduced impact on human health and the environment, when compared with competing products or services that serve the same purpose
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Procurement and Finance: Sustainability and Social Responsibility
Procurements Role in Green Cleaning
•Work with suppliers to create a specific preferred product and equipment list to use in Green Cleaning programs•Organization Regional Tradeshows showcasing Green Cleaning capabilities
• Supplier funded• Customer attended• Employee training
•Work with suppliers to bring new products and equipment to market
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Procurement and Finance: Sustainability and Social Responsibility
• Opportunity: Innnovative Solutions, be first to market with the deployment of ec-H2O™ technology in walk behind battery operated equipment
• Process
– Trials for 3 months
– Standardization of UGL Services Unicco Operations battery floor scrubbing equipment
– Canadian extension
– Deploy in catalogs
• Results/Benefits
– Customer Satisfaction
– Clean dry floors
– $65k in chemical cost avoidance
– Differentiator in customer rfp’s
22
Procurement and Finance: Sustainability and Social Responsibility
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Procurement and Finance: Sustainability and Social Responsibility
– Implemented late 2008
– Objective:
– Meet customers’ growing expectation that we maximize business opportunities for Small Businesses and Diverse Suppliers including minority and woman owned enterprises (MWBE)
– Support diverse suppliers in ways they can scale their business to grow with us
– Mentoring programs
– Training
– Goal:
– Bring advocacy, accountability and credibility to an important and ever-expanding purchasing function
– Year over Year improvement
– Process:
– Tracking is integrated into the on-boarding process
– Suppliers self certifying or 3rd party certified to their diversity status.
– Results
– Greater than 15% of our supplier and contractor spend falls into one of the diverse supplier categories, and the total is growing every month.
Diversity Program
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Procurement and Finance: Sustainability and Social Responsibility
• Existing Clients– Increasing requests for diversity tracking
– Reporting requests by clients
– Report only on specific to diverse groups
– Supplier Diversity also offers a way for UGL Services to align with our customers’ social responsibility objectives.
– Kitting supplies for Bank of America– Example here ---------------------
• Potential Clients – RFP– Customer drives goals based our billing to them
– Participate with client at minority vendor fairs
– Supplier diversity strategic sourcing plan
– Detailed reporting with required formats
– Mentoring Programs
25
Procurement and Finance Startups
In itia tive s Co
st
Sav
ing
s
Eff
icie
nc
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Ris
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Incre
ase
Re
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N ew C o n tr ac t S ta rtu p Pr oc e ss X X
Job Start Up Procurement
Pcard
Adm
inis
trato
rE
-Pro
cure
me
nt
Manager
Com
modity
Specia
list
Acct M
gr
Identifies Procurement Roles @site
CommunicatesRoles to SSC
Creates PO forStart up supplies
Creates capital req for equipment
Contacts localRep for Uniforms
Monitors /expedites order-troubleshoots
availability issues
Sets up-buyers and
approvers
Prvides training support of e-procure users
Identifiessubcontractors
Send on-boarding letters to suppliers
Issue CardsSet up Manager
reports