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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

Ann Van Anne

Regional Manager

Ted Ardelean

Director

R&D Marketing

3

Presented by

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.”


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


• 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

[email protected]

www.cbps.canon.com

Questions

mailto:[email protected]

http://www.cbps.canon.com/

Appendix

25

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?


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?


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?


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


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


N = 165 business respondents in North America who outsource (are considering outsourcing)

document process outsourcing

33

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Procurement Leadership Drives

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Ted Ardelean

Director R&D Marketing

Canon Business Process Services

631-672-6972 [email protected]