CWS Masterclass Track: Negotiation Strategies and Techniques. · 2020-06-12 · supplier...

© 2011 Crain Communications Inc

CWS Masterclass Track: Negotiation Strategies and Techniques.

• Bryan Peña,

• VP Contingent Workforce Strategies & Research

• Staffing Industry Analysts


TO COVER:

• Definitions

• Process

• Evolution

• Critical steps

• Required Data

• How to build a strategy


WHO IS THIS GUY?


CWS COUNCIL


Western Europe/Global CWS Council Members


Captain Obvious……


Dimension that make the difference.


Don’t Forget the Demographics

Labour Force Projected Change from 2010

Source: US Census


SOMETIMES SIMPLE IS HARD…


27%23%

Master Supplier – A staffing supplier that takes overall responsibility for providing clients with temporary staff. In a master supplier relationship, all orders will usually go first to the master supplier to either be filled or distributed to secondary suppliers. Sometimes a master supplier will not only provide a significant portion of the temporary staff working at the employer’s site but also manage an organization’s contingent workforce program. May also be VOP, Vendor On Premise

Primary Suppliers – Two or more suppliers who have the majority of your spend distributed to them, in lieu of or underneath an MSP arrangement. They may be on site and they may also be in a competitive bid situation or not.

Single-Source Supplier – The provision of staffing services employees through a single supplier source.


Managed Service Provider (MSP)A company that takes on primary responsibility for managing an organization’s contingent workforce program. An MSP may or may not be independent of a staffing supplier.

Vendor Management System (VMS)An Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services (temporary help as well as, in some cases, permanent placement services) as well as outside contractor contingent labor.

Statement of Work (SOW) ConsultantAny consultant performing work on a project under a Statement of Work (SOW) arrangement.

Outsourced Services ContractsContracts under which services are provided by an organization that has expertise in operating a specific client function.


Types of MSP’s

• Vendor Neutral

• Master Supplier

• Hybrid Implementations


LOW

HIGH

IV

MANAGED SERVICE

PROVIDER (MSP)

Contingent LaborOne point of contact for suppliers, contractors and hiring managersVMS TechnologySystem & Program SLAs

V

EXPANSION INTO

ADDITIONAL SPEND

CATEGORIES

SOW Management

IC/1099ConsultantsLegalMarketingTargeting

reporting, compliance and cost

Global spend centralized and controlled Global workforce visibilityCustomized SLAs and processCountry Specific SuppliersLocalized VMSConfiguration

GLOBAL EXPANSION

VIMATURITY STAGES

LEVE

L O

F VA

LUE

AD

DED

I

DECENTRALIZED

Multiple suppliersProcurement done on an ad-hoc basisHiring Manager Driven

1980s – Level I

2000s – Level IV

II

MASTER VENDOR

A Prime SupplierOne point of contactLimited AutomationLimited SLAs

III

CLIENT MANAGEDPREFERRED

SUPPLIER LIST

Select set of suppliersStandardized ContractProcurement LedSome automationLimited SLAs

1990s – Level II & III

2010s – Level V & VI

VII

ITM or ?

CW and Perm managed in on Cohesive StrategySource of labor dependant on client defined rulescontractors and hiring managersVMS TechnologyStrategic Integration of suppliers and FTE’s

Future – VII


A growing problem

• What’s the best RFP process?


THE SIA ROADMAP


• Obtain sponsorship and resource commitment

• Define Sourcing Group (SG) characteristics

• Define SG market segmentation and evolution

• Collect internal baseline spend/ demand/pricing

• Document current SG procurement process/cycle

• Conduct SG value analysis

• Assess total cost of ownership/ supplier cost chain

• Develop initial savings estimate

• Assess Sourcing Group (SG) business impact and market complexity

• Conduct supplier focus groups

• Develop SG sourcing strategies

• Document current approaches and gaps

• Revise savings estimates

• Develop global list of suppliers

• Profile supplier’s capabilities via RFI, operation audit or other sources

• Develop prescreening criteria for RFP receipt

• Develop short list of suppliers

• Determine whether supplier development or competitive supplier selection via RFP is the preferred course

• Develop and send RFP

• Analyze supplier RFPs with revised evaluation criteria

• Complete SG total cost analysis

• Develop solicitation/ negotiations strategy

• Establish negotiationsteam

• Develop metrics to evaluate suppliers and savings

• Negotiation rounds with suppliers

• Recommend changes/ agreement(s)

• Develop implementation plan

• Conduct buy-in/ communication sessions

• Test materials/ services

• Implement systems to track spend/savings

• Finalize contracts• Implement new

sourcing plan/ agreement

• Embed and monitor supplier process in user community

• Supplier continuous improvement teams

• Periodically reevaluate SG category and supplier performance

7. Continuous Benchmarking Of Supplier Market

5. Select Competitive Supplier(s)

4. Select Implemen-tation Path

3. Generate Supplier Portfolio

2. Develop Sourcing Strategy

1. Understand Purchasing Category

6. Operational Integration Of Supplier(s)


Six Sigma Road MapDefine

• Define the Opportunity• Validate Charter• Develop Project Plan• Begin Risk Management

Strategy• Develop Stakeholders

Analysis• Develop Communication Plan• Finalize Project Focus

Explore• Generate high-level

concept ideas• Select the concept that

best meets VOC & VOB• Begin high-level design

elements• Complete QFD Phase #2• Analyze existing data• Proactively manage risk

Develop• Develop detailed design• Create detailed design

elements• Design for Lean• Optimize design

performance• Confirm design capability

Implement• Plan and execute a Pilot• Develop Process Control Plan• Finalize Documentation• Implement Solution• Transition Project to Process

Owner• Identify Project Replication

Opportunities• Calculate Financial Benefits

• Project Selection Tools• Financial Analysis• Project Charter• Multi-Generation Plan• Project Planning• Gantt Chart• Pert Chart• RACI• Risk Matrix• Stakeholders Analysis• Communication Plan

• VOC Plan• Kano Model• Ethnography, Interviews,

Focus Groups, & Surveys• Operational Definitions• Affinity Diagram• Structure Tree• QFD House #1• SIPOC, Top Down & Swim-

Lane Process Maps• Non-Value Added Analysis• Basic Statistics/Histogram• Pareto Chart• Box Plot• Kaizen Event• Scorecard• Target Costing

• Application Analysis• Functional Analysis• Creativity Tools• Brainstorming• Benchmarking• Pugh Matrix• Pairwise Comparisons• Analytic Hierarchy Process• QFD Houses #2A and #2B• Capability Analysis• Statistical Tolerancing• Queuing Theory• Crystal Ball• Hypothesis Testing• FMEA• ANOVA• Scorecard

• Value-Added Analysis• Mistake Proofing/Poka-Yoke• 5S• Line Balancing• Work Control Systems• Design of Experiments

(DOE)• Full and fractional factorial

designs• Main effects plot• Interaction plot• Conjoint Analysis• FMEA• To-Be Process Maps• Risk Assessment Tools• Scorecard

• Process Control Plan• QFD House #3• Control Charts• Standard Operating

Procedures• Training Plan• Communication Plan• Implementation Plan• Visual Process Control• Process Control Plans• Project Commissioning• Scorecard• Project Replication• Financial Analysis Tools

Measure• Understand the Voice of the

Customer• Translate the VOC to CCRs• Develop SIPOC Chart• Develop Process Map• Analyze Existing Data• Implement Quick Wins• Validate Business Opportunity• Create a Scorecard

ExploreExplore ImplementImplementDevelopDevelopMeasureMeasureDefineDefine


What is Lean? - The Five Principles of Lean Thinking

1. Specify value as defined by the customer - provide exactly what is needed, when it is needed, in the quantity needed

2. Identify the value stream - the physical and information pathway that adds value to the customer, striving to remove what does not

3. Make the value-creating steps flow continuously – make problems visible

4. Establish pull – Real customer demand pulls products & information through the system: Inventory is waste and producing/working on items & information that are not used is waste; Remove excess capacity or increase rate of customer pull

5. Strive for perfection – a never ending quest to:

• Reduce effort, time, space, cost, and mistakes

• While offering a product which is ever more nearly what the customer actually wants

Source: Jim Womack and Dan Jones, Lean Thinking, 1996


Lean and Six Sigma IntegratedLean and Six Sigma Integrated

Goal – Reduce waste and increase process speed

Focus – Bias for action/ Utilize existing, proven Lean Tools

Method – Kaizen events, Value Stream Mapping

Goal – Improve performance on critical customer requirements

Focus – Use repeatable DMAIC approach (below) for sustained results

Method – Intense focus on projects, performance improvement

Six SigmaQuality + Cost + Explicit Approach

LeanSpeed + Waste + Implicit Approach

X

Lean Six

Sigma


“Systematic” Invention – TRIZ

TRIZ – The Theory of Inventive Problem Solving


TRIZ Problem Solution Path

1. ID Current Problem

AnalogicThinking

2. Translate toStandard Problem

4. Investigate Standard Solution

3. Look for a Previously Well-Solved Problem

YourSolution


CAN YOU KNOW THIS?

What is/are the fundamental problem(s) you are trying to solve?


TYPES OF TALENT SOURCED

• Temporary Labor• Independent Contractors• BPO Services• Consulting Services• Compliance Services• Offshoring Services• Recruitment Services (contingency/retained)• Recruitment Outsourcing• Call Center Services• Background Check services• Etc.


CYCLICAL PROCESS

Sourcing is a cyclical process, with four distinct phases• Capture Margin • Reduce Cost• Manage Demand• Create Value

Different spend categories/companies are at different phases in the cycle


STAGES HAVE DIFFERENT NEGOTIATION APPROACHES

• Capture Margin~ Approach Suppliers for Reduction in Pricing

~ Use of competitive threat in negotiations to reduce supplier prices

• Reduce Cost~ RFP for MSP services

~ Labor arbitrage/Kaizan/Six Sigma

• Manage Demand~ Constraint s on internal usage

• Create Value~ Collaboratively work to identify non-direct sources

of value


SOURCING NEGOTIATIONS CAN TAKE ONLY MANY FORMS

• Sole Source/Direct Award

• Core Team Vote

• RF(x)

• Reverse Auction


CONSIDER ALL YOUR POTENTIAL STRATEGIES


Project Charter:


Identify a Multi-Generational Roadmap:


LOW

HIGH

IV

MANAGED SERVICE

PROVIDER (MSP)

Contingent LaborOne point of contact for suppliers, contractors and hiring managersVMS TechnologySystem & Program SLAs

V

EXPANSION INTO

ADDITIONAL SPEND

CATEGORIES

SOW Management

IC/1099ConsultantsLegalMarketingTargeting

reporting, compliance and cost

Global spend centralized and controlled Global workforce visibilityCustomized SLAs and processCountry Specific SuppliersLocalized VMSConfiguration

GLOBAL EXPANSION

VI

Most MNCs are now Level III or IV

MATURITY STAGES

LEVE

L O

F VA

LUE

AD

DED

I

DECENTRALIZED

Multiple suppliersProcurement done on an ad-hoc basisHiring Manager Driven

1980s – Level I

2000s – Level IV

II

MASTER VENDOR

A Prime SupplierOne point of contactLimited AutomationLimited SLAs

III

CLIENT MANAGEDPREFERRED

SUPPLIER LIST

Select set of suppliersStandardized ContractProcurement LedSome automationLimited SLAs

1990s – Level II & III

2010s – Level V & VI

VII

ITM or ?

CW and Perm managed in on Cohesive StrategySource of labor dependant on client defined rulescontractors and hiring managersVMS TechnologyStrategic Integration of suppliers and FTE’s

Future – VII


SCOPE AND DEFINE PROJECTS


Project Charter Elements

Business Impact• Why should we do this? What is the benefit?

• How does this project align with the business strategy?

• What is the quantified value of the project ($$$)?

Project Scope• What are the boundaries of the initiative (start and end

steps of the process or parts of a system)?

• What authority do we have?

• What is not within scope?

Problem Statement• What “pain” are we or our customers experiencing?

• What is wrong or not working?

• Why do we think we can generate the value proposition described in the Business Impact?

Goal Statement• What are our improvement objectives and targets?

• Specifically, what are we going to do and deliver?

• How will success be measured? What specific parameters will be measured? Define Y = f(x)

Team Selection• Who are the team members?

• What is their role?

• How much of their time will be dedicated to the project?

Project Plan• How are we going to get this done?

• When are we going to complete the work?

• What are the major milestones (tollgates)?


CRITICAL CONSIDERATION

• Decision process?~ Most projects fall down/fail due to poor decision process


WHICH IS YOU?


STRATEGY DEVELOPMENT


IN-AND-OUT-OF-SCOPE EXERCISE

• Brainstorm elements of the project

• Write each element on a sticky note

• Draw a circle on a flip chart to indicate project boundaries

• Place the notes either inside or outside the circle’s boundaries to show whether the element is within the team’s scope or not.

• Review with the Executive Sponsor


SO HOW DO YOU SPOT THE DIFFERENCE?


HARD CRITERIA


SOFT CRITERIA:


CONSIDER COMPANY INTERESTS

• What is their DNA?• Do they have a “consistent” client profile?• Can they articulate a clear vision ?• How promptly do they respond to requests?• What is their technical roadmap?• Where does the value propositions sit relative to

the project office?• What is their process for scoping the solution

delivery?• Under what conditions will they not bid?


WHAT IS MOST IMPORTANT TO THE LONG TERM?


1,000 monkeys typing for 1,000 years……..


SAVINGS ARE REAL……..AT FIRST….


BUT SAVINGS COMES FROM ONLY SO MANY PLACES


Adoption


Culture counts…


• Procurement

• Human Resources

• IT

• Operations

• Finance

• Other

THINK OF YOUR PRIMARY CLIENT GROUPS:


BY PERCENTAGE WHICH TARGET GROUP DOES YOUR COMPANIES CORE VALUE PROPOSITION MOST APPEAL TO?


SOCIAL MEDIA AS A NEGOTIATING TOOL


WIIFT


WHAT THEY WANT…

• Higher impact roles being filled

• Clear spend parameters

• IT support for clear VMS integration rules

• Longer tenured roles

• Clear rules of engagement

• Consistent and clear RFP timeline

• Strong executive support


YOUR RFP SHOULD INCLUDE


No such thing as a free lunch…


HOW DO YOU PAY FOR IT?

Program Funding SourceSupplier-fundedClient-fundedCombination of Client- and Supplier-fundedManagement Fees are Bundled as Other Cost

Program Pricing ModelsAdministrative Fee as a percentage of Spend Under

ManagementFixed, Monthly Management FeeFee per WorkerLicense Fee


CONCLUSION:

• Success starts in negotiating deals which provide input from your entire team

• Start the RFP process with a clear charter

• Take the long view

• Don’t be afraid to engage non-traditional team members

• Be sure to provide the right information to responding providers~ Create a deal they will truly want to respond to

• Finally have realistic expectations of the outcome


Questions?


FOR A BID READINESS CHECKLIST:

Email :[email protected]

Subject : “Checklist”


Bryan Pena

VP, Contingent Workforce Strategies and Research

+1-650-390-6188

[email protected]

CWS Masterclass Track: Negotiation Strategies and Techniques. · 2020-06-12 · supplier...

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