3 ways to improve your global mobility procurement processes
Modern, international organisations require complex global mobility solutions. These organisations have a highly diverse relocation partner portfolio, with teams and agents located around the world. At the same time, ever younger employees are given the chance to relocate within global organisations. However, because these assignments are typically of shorter duration and involve lower-paid staff, there is a smaller budget allocated to their assignments. The result? You have to do more with less. It is no surprise that the job of identifying and selecting the right suppliers is a challenge for procurement departments.
We suggest 3 key ways in which you can improve the procurement process and get better results, while also removing some of the complexity.
1. Talk about value, not discount
Budgets are under pressure, but focusing only on cost could be damaging in the long run. This is because the financial health of the supplier base – and your suppliers’ ability to make a reasonable profit from working with you – directly affects the value that they can contribute.
A recent survey underlined this point by correlating customer satisfaction ratings with the discount offered by the supplier. When suppliers heavily discounted their price (by more than 64%), the customer stated that would recommend or use them again in 90% of cases. By contrast, customers using suppliers who discounted by less than 64% said they would recommend or use them again in 99% of cases. The survey covered thousands of moves and there was only one complaint about the less-discounted suppliers.
According to these figures, by paying more you are practically guaranteed a problem-free experience. By forcing suppliers to discount, however, you run a one in ten risk of something going wrong – and that problem could be more expensive if it jeopardizes the success of an important global assignment.
Bear in mind that if suppliers are struggling to preserve a tiny profit margin, they may become less reliable. You may find they quibble over small changes in requirements. Alternatively, they may either stop taking on your projects (especially if they get paid better elsewhere) or crumble under pressure if the financial pressure becomes too great. Either way, you are left with a gap in the supply chain.
2. Get more services from your suppliers
One way to get more value is to seek out the additional services that you may not expect from a relocation partner. These include a number of resources that might otherwise oblige you to use a separate specialist supplier. By consolidating services with a single supplier you will gain economies of scale, and avoid having to go through the selection process for additional suppliers. Extra services include tasks such as home search and pet transportation, but the most interesting service to procurement departments may be that many larger relocation partners will also help directly with legal advice and document preparation.
3. Let the standards take the strain
One of the biggest challenges in supplier selection is establishing how you gather credentials information. Going to a number of suppliers with an RFI (request for information) in order to filter only those who have certain qualities can be time-consuming. Equally, deciphering the information that comes back in is a challenge in itself as suppliers are keen to stress their strengths and gloss over their weaknesses.
Certifications such as FAIM not only make life easier for procurement departments, they also provide evidence of a supplier’s capabilities. The FAIM certification is in effect a hallmark of a high-quality supplier. It is proof that the supplier meets a stringent set of quality standards which are verified every 3 years by EY (Ernst & Young) – an independent auditor.
Time to take a more strategic approach
Procurement teams often talk about how they would like to play a more strategic role, and not to be seen simply as purely commercial administrators. These three tips will help you step back and see things from a more strategic angle. You will be selecting relocation partners for global assignments based on their ability to help the organisation achieve a successful outcome, rather than just driving down costs.
Pictures by Breather and Jose Martin Ramirez