Vendor Relationship Management

Transcription

1 Vendor Relationship Management Getting What You Paid For (and More) Stephen Guth VP, Vendor Management Thursday, February 26 th, 2015, 8:00 9:00 a.m.

2 Topics Case Study Company Intro Begin with the End in Mind Implementation Approach Vendor Management Fundamentals Tools Vendor Classification Model Vendor Risk Profile Vendor Relationship Management Activity Responsibilities 1

3 About Citizens Property insurer of last resort Created by Florida Legislature in 2002 as not-for-profit, taxexempt, government entity Board of Governors: members appointed by Florida's Governor, President of the Florida Senate, Speaker of the Florida House and the state's Chief Financial Officer As of 12/2014, 661K policies in force with $229B total exposure (PIF on a planned decline) Procurements conducted in compliance with Florida Statute 650+ AP vendors, over $950M annual spend (millions more in loss adjusted expenses) 2

4 Why? Coherent and prudent approach to vendor management The right vendors Ensure contract compliance Attain beyond the contract value Support why we do what we do 3

5 Begin with the End in Mind Right organizational structure and right focus Success of vendor management (post-award) dependent on pre-award activities Clear and concise scopes of work, deliverables, milestones, performance measures, and solicitation requirements Vendor onboarding, contract kick-off, contract monitoring, relationship management Consider: policies / procedures; RACI; templates and tools; and, communication and training 4

6 Vendor Management Governance Areas Governance Area Program Demand Contract Risk Security Performance Financial Relationship Description The Vendor Management Program is defined, communicated, followed, and continuously improved Demand for vendor services is captured, planned, tracked and managed, with qualified vendors being engaged through sound sourcing decisions Vendor relationships are defined by robust contracts with clear rights, obligations, and remedies that are efficiently administered throughout the vendor lifecycle Vendor-related risks are identified, assessed, mitigated where possible, and tracked Citizens data and intellectual assets accessible by vendors are protected and secured contractually, logically, and physically as required by Citizens Vendor delivery and contract performance are monitored against measurable criteria to achieve compliance-to-contract and managed to attain beyond the contract value In compliance with internal controls, vendor spend is approved, projected, tracked, analyzed, and reconciled to ensure appropriate use of Citizens funds, realize expected financial benefits, and identify opportunities for spend reduction Vendor relationships are managed in a coherent, structured, and consistent manner 5

7 Decentralized Implementation Approach Vendor Management Center of Excellence Enterprise Vendor Management Program Claims C,L&EA CAS ERM F&A HR IT IA UW VMO Business Need Vendor Engagement / Selection Delivery Close-Out BU VRM / CM 6

8 High-Level Roles and Responsibilities VMCoE Plan Prioritize Promote Identify VM better practices Identify VM projects and initiatives (pipeline) Assist in standardizing work product Promote use of work product Contribute to / review enterprise VM policy, standards, processes, and procedures (work product) VMO Build Support Aggregate Facilitate VMCoE Resource pipeline Develop and maintain work product Consolidate and distribute enterprise metrics and reports Fulfill VM Policy functions Fulfill other VM functions TBD VRM / CM Run Leverage Report Utilize work product Contribute to enterprise reporting Fulfill VM Policy functions Fulfill BU-specific VM functions 7

9 Vendor Management Fundamentals Classification + risk = relationship management Vendor spend analysis Getting what you paid for Robust requirements Responsible vendor review Service levels Contract non-compliance procedures Above and beyond Vendor workshops Sharing of plans 8

10 Vendor Classifications and Attributes 9

11 Vendor Classifications and Attributes 10

12 Vendor Classification Model

13 Vendor Risk Profile 12

14 Vendor Relationship Management 13

15 Vendor Spend Analysis Process of collecting, cleansing, classifying, and analyzing expenditure data from all sources within the organization (e.g., purchasing card, eprocurement) for the purposes of ensuring contract compliance, reducing costs, and improving operational performance Analyzes the past, current, and forecasted expenditures to allow visibility of data by supplier, by commodity or service, and by department within the organization Answers: Who is spending? What am I really spending? With whom am I spending it? What did I buy? When was it bought? Where was it bought? Am I getting what I bought? 14

16 Vendor Spend Analysis (Example Reports) Type Contains this Data Answers these Questions Category Vendor Top Ten Same / similar products or services spend by vendor, with drill down to line item price detail Total spend by category and subcategories Total spend by category and total vendors for each category Spend with vendor Spend by vendor classification Spend by contract (including variances, change controls) Frequency of purchases Top ten vendors by spend Top ten categories by spend Top ten by vendor classification Are we being charged appropriately and consistently for a product or service? On which items do we spend the most? Are we buying same / similar products or services from too many vendors? If we re spending more than we anticipated with a vendor, what benefit such as additional discounts are we getting in return? How much are we spending with a particular vendor across all categories of spend? Of our total spend, which vendors receive the greatest share? Of our total spend, what vendor classifications receive the greatest share? What s our total spend under a particular contract? How much are we spending under a contract compared to what we thought we d spend and when? Are we spending more or less with a vendor year-over-year? What vendors do we spend the most with? What do we buy the most of? Of our total spend, how much do we spend with our Strategic, Tactical, Operational, and Commodity vendors? 15

17 Steps to Compliance-to-Contract Terms and Conditions Catalog Service Level Catalog Solicitation requirements validation Evaluation Team and Negotiation Team qualifications, roles and responsibilities Contract compliancy Contract kick-off meeting Contract monitoring tool Contract non-compliancy Work suspension Corrective Action Plan 16

18 High-Level Roadmap 2015 Getting What We Paid For Build Out VM Program VM Lifecycle RACI Solicitation Requirements Validation Responsible Vendor Review Vendor Performance Scorecard Contract Vendor Profile Terms and Conditions Catalog Evaluation Team Member Criteria 2016 The Year of Automation Build Out ERP Identify Point Solutions Vendor Spend Analytics Refine Operations Cost Containment 2017 Above and Beyond Strategy Sharing Access to Innovation Solve Scalability / Risk Mutual Focus on Cost Drivers 17