Cushman & Wakefield- Smarter Procurement to Drive Corporate Growth (IASTA webcast)

Smarter Procurement to Drive
Corporate Growth
A Partnership

© Joanna Martinez, May 2012, All Rights Reserved

Overview

• 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.


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


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

 Critical Systems  Compliance & Regulatory
 Energy Management Management
 EH&S Administration
 Emergency Preparedness
 Sustainability Program
 Work Order Management
 Financial Management &
 Predictive Maintenance Reporting
 Housekeeping  Office Support Services
 FM Staff Development  Knowledge of building codes
 Project management, and and regulations, and how
they differ across the globe
resulting partnerships with
GC’s, subecauseontractors

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

FM Professionals Purchasing
RFI, RFP Spot Buys for Corporate Spend
Supplier Selection
Negotiations
? Transactional Processing
Order Entry
Ongoing SRM Delivery Tracking

Current Process

FM Professionals Supplier Evaluation Corporate Sourcing
Business Requirements Sourcing Strategies Procurement Tools and Techniques
Detailed Specifications Negotiations Manage Strategic Sourcing Process
Scope of Work Total Cost Analysis & Measurements
Contracts
Final Decision Category Management
Supplier Mgmt


What Happens When a New FM Account Relationship Begins?

FM Action Related Procurement Competency

• Manage people transition • Contract Management Systems

• Organize contracts and
understand key expiration dates


Contracts Management Benefits

How a Contract Management System helps the Strategic Sourcing
process:
• Automated alerts and reports on contract expiration.
• Captures payment terms to support early payment discounts
• Provides visibility to supplier rationalization options
• Helps the accrual process by providing visibility to contractual
commitments
• Assists in assessing compliance to signatory policy
• System features help employees know where to go for purchases
• Improves planning:
- Workload management
- Business cycles (union contracts, energy peaks, etc.)

© Joanna Martinez, March 2012, All Rights Reserved
© Joanna Martinez, May 2012

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

Number of Contracts Archived
10000

Information = Sourcing Projects
9000

8000

7000

6000

5000

4000

3000

2000

1000

0
Feb Mar Apr May Jun Jul Aug Sep Oct No7 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

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




• Manage people transition • Contract Management Systems
• Organize contracts and
understand key expiration dates • Global processes and linkages
• Assess for cost reduction
opportunities


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

Global
Client Preference Global
Maintenance Help Desk

Elevator Maintenance

Suppliers
ability to
deliver Local Regional

Security
Lease
s

MRO

Local
Specific Generic
Business Needs



• Manage people transition
• Organize contracts and • Contract Management Systems
understand key expiration dates
• Assess for cost reduction • Global processes and linkages
opportunities
• Support facilities on behalf of • Different sourcing approaches
the client
• Automate/ apply sourcing tools
• Manage projects on behalf of
to the general contractor
the client relationship


Corporate Procurement Supports Facility Management

 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


Savings Beyond Standard General Contractor Methods

Budget Actual Savings % Savings
Electrical $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%


C&W’s Reverse Auction Tool
C&W’s Immediate Feedback Pricing Tool
C&W’s Online Pricing Tool
ELECTRIC
AL


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

Some other thoughts…


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

OPPORTUNITY ANALYSIS
High Level Potential Cost Improvement

High Category Improvement Creative Solution
Opportunity Opportunity

20%+ 10%+

Historical
Procurement
Significant Benefit Strategic Sourcing Process
Expertise and
Opportunity Opportunity
Effort
40% + 30%+

The Process…
Low

Low Category Content and Technical High
Knowledge

…Skip the obstacles and go back later

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
Sourceable Spend

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

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

$

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


Global HQ European HQ

12800 N. Meridian St. Hartham Park
Suite 425 Corsham, Wiltshire
Carmel, IN 46032 SN13 ORP
United States of America United Kingdom

Operations: 317.594.8600 Operations: +44 (0) 870.199.4060
Sales: sales@iasta.com Sales: +44 (0) 1249.700726

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Cushman & Wakefield- Smarter Procurement to Drive Corporate Growth (IASTA webcast)

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