ADP LLC. Michael Bieger Senior Director Global Procurement

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2 ADP LLC Michael Bieger Senior Director Global Procurement

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4 There and Back Again for Fleet

5 One manufacturer to rule them all, One lessor to find them, One car to bring them all, and in the EU bind them.

6 Global Learnings in Fleet what worked and what didn t North American priorities and practices are not global priorities or practices Put a good person in a bad system and the system wins every time. W. Edwards Deming Any system you do not understand is a bad system Michael Bieger

7 Determining your roadmap Baseline Analysis Known global spend in excess of $60MM annually 2 companies; ADP Inc., ADP Dealer Services 19 countries; 21 with Canada & US 34 makes 24 lessors 1,388 vehicles EU, 1,854 vehicles North America 27 Procurement associates 3 Procurement organizations ADP 2009

8 Determining your roadmap - global approach; why bother Understand actual global exposure Unified approach to spend Consolidated data collection Consolidated reporting Actionable analysis to drive down costs One point of contact for global suppliers Environmental oversight at global level Single point for direction of local ADP operations (fleet) personnel Pressure (when needed) to drive change Better able to effectively coordinate ADP response to sales/supplier relationship Central control to manage unified approach to spend Actionable analysis to drive down costs 8

9 Determining your roadmap areas of concern in Europe CO2 reduction Lessor consolidation Limit assoc. excess ability to contribute to cost of vehicle and options above their selector Limit vehicle choice selectors Manufacturer consolidation Matrix-bidding Multi-bidding Pay as you go Unbundle insurance Unbundle service Use fleet management co

10 Benefit Determining your roadmap chosen projects 10 Lessor consolidation 9 Limit assoc. excess ability 8 Limit vehicle choice - selectors 7 6 Manufacturer consolidation Matrix-bidding Multi-bidding Pay as you go Unbundle insurance Unbundle service Use fleet management Co Implementation process complexity

11 Determining your roadmap chosen projects 10 Lessor consolidation 9 10 Limit assoc. excess ability Limit vehicle choice - selectors 7 7 Manufacturer consolidation Matrix-bidding Benefit Multi-bidding Pay as you go Unbundle insurance Unbundle service 2 Use fleet management Co Implementation process complexity

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13 Unbundle Insurance - Behind the Scenes; What Went Right Began engagement by forming a fleet team: Corporate Fleet Team, Procurement from ADP s two major business units; Employer Service (ES) and Dealer Service (DS), Included DS HR representative on team Made introductions to two HQ countries and 4 other major fleet operators; France, UK, Germany, Netherlands, Belgium, Italy Amended communication style s formally polite and not American familiar European date formats in communications Use correct gender designation Scheduled and held regular meetings with European stakeholders Made trips to Europe to meet with BU representatives and lessors Included ADP Risk Management as member of Insurance Team to aid in market review 13

14 Unbundle Insurance - Behind the Scenes; What Went Wrong The Economy Began engagement forming a fleet team: Corp. Fleet, Procurement from ADP s two major business units; Employer Service (ES) and Dealer Service (DS) Only included the two Director s of Procurement as leads for Europe Failed to circle wagons with CFO s, Presidents of each division Failed to continually include country operational representatives Didn t have central reliable source of data Included DS HR representative on team Only engaged HR representative from the UK (only DS business unit) Failed to engage ES representatives Netherlands of particular concern Employee contract requires reimbursement to ADP for accident deductible 14

15 Unbundle Insurance - Behind the Scenes; What Went Wrong (cont. 2) Amended communication style Communication challenges; who gets what salutation? Dear, Hello, first name only Translation errors What Not to Do Liebe Grüße = more personal valediction meaning Best Regards Liebe Große = BIG LOVE Scheduled and held regular meetings with European stakeholders; kept team static Stakeholders evolved into 2 leads as personnel changed 3 different ES Germany changes 2 ES Netherlands changes 4 Italy changes DS/ES Neglected to bring new representatives into circle Made trips to Europe to meet with BU representatives and lessors One off trips only included lead team Didn t connect with top of organization or individual country contacts 15

16 Unbundle Insurance - Behind the Scenes; What Went Wrong (cont. 3) Made introductions to two HQ countries and 3 other major fleet operators; France (ES HQ), UK (DS HQ), Germany, Netherlands, Belgium Only concentrated on these countries for CO2 proof of concept initiative and neglected to expand to other countries as more initiatives came to light e.g. global insurance Prado's 80/20 rule doesn t apply to Europe European egalitarian attitude supports all and gives weight to everyone Neglected to hear from everyone; even small players are players Top down only works if you have the right top Cohen and Bradford Influence Without Authority 16

17 Multi Bidding Opportunities: Reduced cost through competition Clarity around actual market prices Set stronger tone to lessor relationships Challenges: Pushback from lessors - losing market share, and internal associates increased administration / workload Historically single source if the country is comfortable with current situation at the most there are two Contract with extra lessors Learnings: Easiest to implement and most profitable in terms of reducing costs Sets the tone for future successes; results can demonstrate expertise in the category to internal advocates and blockers

18 Matrix Bidding Opportunities: Savings Reduced mid-cycle uncertainty , , , , , , , , , , , Challenges: Lack of expertise Lack of understanding current driver history Difficult to report / defend lessor choice Pushback from lessors Learnings: Learn lessors strengths by manufacturer and mileage Choose best blended solution - not single combination (middle) Do not treat every driver the same; driving habits and history differ

19 Matrix Bidding Opportunities: Savings Reduced mid-cycle uncertainty , , , , , , , , , , , Challenges: Lack of expertise Lack of understanding current driver history Difficult to report / defend lessor choice Pushback from lessors Learnings: Learn lessors strengths by manufacturer and mileage Don t choose on single combination (middle) Do not treat every driver the same; driving habits and history differ

20 Use Fleet Management Company Opportunities: Bring industry expertise to bear Best practices Savings Reporting clarity / consolidation Challenges: Pay money to save money Adding middleman no matter how expert Local vs. global Learnings: Build conservative business case Include Finance and Country manager

21 Manufacturer Consolidation / Establish Vehicle Selectors Opportunities: Savings (better discounts) Support global buy Challenges: Local preferences Works council Employment contracts Coordinating across countries Business case for each country Selector build, there are literally hundreds of vehicle offerings Learnings: Involve HR early Involve Finance early

22 Establish Vehicle Selectors Case Study: There are varying levels of acceptance between countries for introduction of selectors ADP Germany France Italy The Netherlands 2 cars 5 levels 3 cars per 5 levels 6-10 cars per 5 levels 7-11 cars per The Netherlands was a user / chooser environment Historically a User / Chooser environment Move from monthly budget for vehicles to limited selector 50 leases to be renewed in 2015 for driver level 3 = 50 differing makes and models 6 months to implement (Germany was 1 day) 7 rounds of quotations with lessors Over 200 vehicles examined high mileage = diesel low mileage = petrol Review and re-banding of all associates into new selector levels Multiple iterations of selectors

23 Limit Associate Excess Vehicle Contribution Opportunities: Reduced cost Reduced administration Challenges: HR concerns Cultural change Learnings: Easier than eliminating vehicles A non-starter after the big moves of manufacturer and selector consolidation

24 Pay as you Go / Unbundle Services Opportunities: Savings Better visibility better control Challenges: Possible additional administration / cost Lack of internal expertise Learnings: We will see

25 Lessons Learned Inclusion is Key Obtain support / buy-in from senior leadership but ensure the local in-country representation has a seat at the table as well Don t, make that NEVER, forget HR in your plans Over Communicate; Enough is Never Enough (Lyrics by Garbage) Have access to reliable, accurate, up to date data Take ownership, lead the team but solicit feedback for a blended solution Be sensitive to communication styles Include trips for face-to-face meetings with stakeholders; especially at the beginning Get it in writing and even then question and clarify 25

26 Questions?