cushman & wakefield- smarter procurement to drive corporate growth (iasta webcast)

© Joanna Martinez, May 2012, All Rights Reserved

Smarter Procurement to Drive Corporate Growth

A Partnership


• Cushman & Wakefield, a privately held company, is one of the world’s largest commercial real estate services firms with brokerage, facilities management, consulting, capital markets, and other services.

• The company was founded in 1917 and the firm’s largest shareholder is Exor, the investment arm of the Agnelli Family.

• Cushman & Wakefield currently has 231 offices in 58 countries, and 13,000 talented professionals.

• Cushman & Wakefield was named the exclusive leasing agent for 1 World Trade Center, the Freedom Tower, by the Port Authority of New York and New Jersey. The Freedom Tower, will total 2.6 million square feet upon its completion in 2012.

Overview

http://www.cushwake.com/

Facilities Management Trends

• Facilities Management is evolving from localized building management and office services to a centralized workplace solution • Sourced through corporate procurement groups and/or consultants• Focus on operational and performance management to deliver best in class price points and service delivery levels.

Major changes in FM include:– Investments in energy and utility management – Expanding scope– Focus on enterprise goals

• Sustainability and LEEDs mandates• ISO compliance• Diversity

– Risk Management



Critical Systems Energy Management Emergency Preparedness Work Order Management Predictive Maintenance Housekeeping FM Staff Development Project management, and

resulting partnerships with GC’s, subecauseontractors

Compliance & Regulatory Management

EH&S Administration Sustainability Program Financial Management &

Reporting Office Support Services Knowledge of building codes

and regulations, and how they differ across the globe

Many Standard FM Services and Resulting Skill Sets are Not Necessarily Procurement Core Competencies

But our core competencies are complementary, and by working together we can do a faster, more effective job for our clients and our suppliers



The Circle Charts: Partnering to Better Serve our Clients

Former Process

Current Process

FM ProfessionalsRFI, RFPSupplier SelectionNegotiationsOngoing SRM

?

PurchasingSpot Buys for Corporate SpendTransactional ProcessingOrder EntryDelivery Tracking

FM ProfessionalsBusiness RequirementsDetailed SpecificationsScope of WorkFinal Decision

Corporate SourcingProcurement Tools and TechniquesManage Strategic Sourcing ProcessTotal Cost Analysis & MeasurementsCategory Management


Supplier EvaluationSourcing StrategiesNegotiationsContractsSupplier Mgmt


What Happens When a New FM Account Relationship Begins?

FM Action

• Manage people transition

• Organize contracts and understand key expiration dates

Related Procurement Competency

• Contract Management Systems




How a Contract Management System helps the Strategic Sourcing

process:

1. Automated alerts and reports on contract expiration.

2. Captures payment terms to support early payment discounts

3. Provides visibility to supplier rationalization options

4. Helps the accrual process by providing visibility to contractual

commitments

5. Assists in assessing compliance to signatory policy

6. System features help employees know where to go for purchases

7. Improves planning:

- Workload management

- Business cycles (union contracts, energy peaks, etc.)

Contracts Management Benefits

© Joanna Martinez, March 2012, All Rights Reserved


• Note: The trend line indicates the number of contracts identified, including contracts in queue.

Number of Contracts Archived

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Feb Mar Apr May Jun Jul Aug Sep Oct No7 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Information = Sourcing Projects

A Contract Management tool can be a powerful assetand a “To-Do” list for years to come

FM Action



• Assess for cost reduction opportunities



• Global processes and linkages



Global

Local

Specific Generic

Suppliers ability to deliver

Business Needs

Client Preference Global

Regional

Leases

Maintenance Help Desk

Procurement Understands Global Relationships …and understands that not all spends should be global

Elevator Maintenance


MRO

Security

Local

FM Action



• Assess for cost reduction opportunities

• Support facilities on behalf of the client

• Manage projects on behalf of the client



• Global processes and linkages

• Different sourcing approaches

• Automate/ apply sourcing tools to the general contractor relationship




Supported the facility management sourcing team consolidation for the integration of two large banks.

Team charter, spend analytics, supplier leverage opportunities

Utility company used eProcurement tools to speed up NDA process for 30 potential vendors

Large bank reduced cost audio conferencing via benchmarking

Created a client specific Contract Management System template as part of new client on-boarding.

Allowed facility teams to quickly identify sourcing opportunities

Enabled advanced negotiation tools to allow immediate pricing feedback to suppliers.

Immediate Pricing Feedback Tool – eProcurement tools for General Contractors to obtain “Best and Final” Pricing

Dynamic Bidding – spreadsheet bidding over several day to allow subecauseontractor input/ participation

Corporate Procurement Supports Facility Management

Budget Actual Savings % SavingsElectrical $270,000 $229,588 40,412$ 15%Doors Frames Hardware $170,000 $132,000 38,000$ 22%Glass Glazing $100,000 $89,500 10,500$ 11%HVAC $146,000 $157,900 (11,900)$ -8%Drywall Accoustical $205,000 $140,500 64,500$ 31%Paint Wallcover $60,000 $49,000 11,000$ 18%Flooring $140,000 $138,500 1,500$ 1%Millwork $140,000 $116,000 24,000$ 17%Mechanical $1,400,000 $1,224,765 175,235$ 13%Electrical $1,300,000 $1,175,000 125,000$ 10%Drywall $700,000 $574,615 125,385$ 18%Computer Flooring $146,000 $138,730 7,270$ 5%Paint $98,000 $73,900 24,100$ 25%Millwork $85,000 $76,000 9,000$ 11%Cabling $592,000 $522,382 69,618$ 12%Furniture - new $1,847,850 $1,129,616 718,234$ 39%Car Parks - 300 $600,000 $443,000 157,000$ 26%Carpeting $277,500 $198,860 78,640$ 28%Carpet II $580,000 $385,000 195,000$ 34%Movers $120,000 $55,453 64,547$ 54%Dallas Office VOIP $165,000 $147,000 18,000$ 11%Glass Door & Glazing $124,000 $117,500 6,500$ 5%Ceiling $215,000 $143,000 72,000$ 33%Telecom Software and Hardware $335,000 $261,000 74,000$ 22%

Total $9,816,350 $7,718,809 $2,097,541 21%

Savings Beyond Standard General Contractor Methods



ELEC

TR

ICA

L

C&W’s Reverse Auction Tool

C&W’s Immediate Feedback Pricing ToolC&W’s Online Pricing Tool

C&W’s Online Pricing Tool: Back and Front Covers


Some other thoughts…


High

Low

High

Historical Procurement Expertise and Effort

Category Improvement Opportunity

Significant Benefit Opportunity

Strategic Sourcing Process Opportunity

Creative Solution Opportunity

Category Content and Technical Knowledge

OPPORTUNITY ANALYSIS

High Level Potential Cost Improvement

Low

20%+ 10%+

30%+40% +

The Process…

We found a place with no gatekeeper: The Process Itself!


And we applied the “Captain Cook” method of sourcing engagement



Portfolio

Professional fees

Rent

Capital

Print and Fulfillment

MRO

Travel

Tech - Maintenance, Leases

Recruitment, Training, Outplacement

Office Equipment & Services

Telecom

Tech - Consulting

Meetings

T&E

Promotions and Servicing

Misc. Employee Benefits

Employee Fringes

Misc. Business Fees

…Skip the obstacles and go back later

Sourceable Spend


Annualized Value of Cost Reductions (P&L and non-P&L)

Start Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

$

… because you can build a “tidal wave” of Justification.

Copyright © Iasta, All Rights Reserved

Global HQ

12800 N. Meridian St.Suite 425

Carmel, IN 46032United States of America

Operations: 317.594.8600

Sales: [email protected]

Global HQ

12800 N. Meridian St.Suite 425

Carmel, IN 46032United States of America

Operations: 317.594.8600

Sales: [email protected]

European HQ

Hartham ParkCorsham, Wiltshire

SN13 ORPUnited Kingdom

Operations: +44 (0) 870.199.4060

Sales: +44 (0) 1249.700726

European HQ

Hartham ParkCorsham, Wiltshire

SN13 ORPUnited Kingdom

Operations: +44 (0) 870.199.4060

Sales: +44 (0) 1249.700726

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