Financial Contributions from a Shared Services Procurement Organization

Financial Contributions from a Shared Services Procurement Organization

March 2011

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A service company supporting essential infrastructure, property and industryA service company supporting essential infrastructure, property and industry

Values of safety, integrity, outstanding customer service, teamwork and open communicationValues of safety, integrity, outstanding customer service, teamwork and open communication

43,000 people with $3.6 Billion in revenue. Record financial performance, highly diversified and stable business model

43,000 people with $3.6 Billion in revenue. Record financial performance, highly diversified and stable business model

SectorsWater & Wastewater, Power, Defense, Communications, Transport (road & rail),

ServicesDesign, Engineering Construction, Operation, Maintenance, Asset Management

SectorsMining, Oil & Gas, Chemicals, Mineral Processing

ServicesProject Management, Engineering, Construction, Asset Management,Industrial Service

SectorsRail -Passenger -Freight-Infrastructure

ServicesDesign, Manufacture, Maintenance, Asset Management Refurbishment

SectorsCorporate, Education, Industrial, Retail and Government Sectors

ServicesCorporate Real Estate, Facilities Management, Project Management, Procurement, Finance & Accounting

UGL Limited (ASX:UGL)

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Finance & Procurement

• Overview UGL Ltd and UGL Services

• Overview UGL Services Procurement

• Procurement Evolution

• Procurement Initiatives: Impact on financial results

–Cost Savings

–Increase Sales

–Improve Productivity

–Manage Risk

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Back Office Support: Shared Services at a Glance

VP SSC

Payroll BenefitsPayment Services

Purchasing

Credit/Collections

CustomerInvoicing

Work

Control

73 FTE’s

SSC Cost per Revenue $

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

FY01 FY02 FY03 FY 04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

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SSC Purchasing Services

• National ContractsNational ContractsNational ContractsNational Contracts

• EEEE----Procurement: Procure PlusProcurement: Procure PlusProcurement: Procure PlusProcurement: Procure Plus

• Vendor Vendor Vendor Vendor OnboardingOnboardingOnboardingOnboarding

• Supplier PerformanceSupplier PerformanceSupplier PerformanceSupplier Performance

• Subcontractor complianceSubcontractor complianceSubcontractor complianceSubcontractor compliance

Director ProcurementServices

Procurement SystemsManager

Commodity Manager

Commodity Manager

Compliance ClerkVendor On-boarding

Administrator

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Purchasing and Finance: Key Initiatives

Initiatives Co

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Man

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Strategic Sourcing X

E-Procurement X X

Vendor Management System X X X

Telecom Initiiative X X

Procurement Card Program X X

Compliance Program X X

Green Initiatives-TradeShows X X

Green Initiatives-Product Innovation X X

New Contract Startup Process X X

Diversity Programs X X

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Procurement Initiatives Timeline

Formed SSC Procurement

Focus on National Contracts MRO

Eprocurement 1st Try

Eprocurement 2nd Try Success

Green Initiatives_Supplier Trade Shows

Vendor Management System

Vendor Risk Management

National Contracts Services

2001 2011

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Procurement and Finance: Strategic Sourcing

• Phase 1 ($ Spend under Contract)

– Janitorial and Industrial Supplies

– Uniforms

– Promotional Items

– Office Supplies

• Phase 2– Waste Management

– Pest Control

– Roofing

FY Annual Savings ($MM)

Note

$390

$657

$1,402

0

200

400

600

800

1000

1200

1400

1600

2008 2009 2010 2011

Note: In 2009, metric was changed to hard savings only

Initiatives Co

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Strategic Sourcing X

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Strategic Sourcing(cross functional team – critical)

Strategic Sourcing follows a rigorous seven step process; activities in each step are tailored to the nature of the commodity and thesupply market.

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Savings/Benefits Documentation

Baseline Method (hard savings) – agreed to with our internal client

• The baseline cost for items/services to be bid must use one of the following Baseline Methods (listed in order from most preferred method to least preferred):

– Purchase price of same/similar item within the last year (may need to be adjusted by a price index)

– Alliance pricing from existing contract

– Unsolicited bid for same item within the last year

– Budget estimate

– Supplier budgetary estimate

– Engineering estimate

– Alternate method specific to bid (i.e. the difference between incumbent bid and selected supplier)

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Finance and Procurement E-Procurement

• Overview– 849 Buyers throughout North America

– 11Punch Out Suppliers

– 29 Supplier Catalogues on Procure Plus

• Financial Benefits– View of pipeline for forecasting purposes

– Validation of contract pricing

– Ease of ordering prevents maverick behavior

– Invoices come in faster resulting in timely recording of expenses

Initiatives Co

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E-Procurement X X

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Procurement and Finance: E-Procurement

UGL Services Unicco Operations

Percent of Purchasing transactions following guidelines

PSG

Total Transcations

Over $1k 221

Under $1k 2790

3011

Transactions following policy/guidelines

Over $1k 183

Under $1k 2670

2853

Overall performance against Guidelines

Percent following guidelines 95%

Goal 1 90%

PSG/DO - Paul Henry GULFSTREAM - ADMIN ALLTEL 1

GULFSTREAM - ADMIN Total 1

GULFSTREAM - AUTO RIVETOR Industrial Tooling Sales Inc 1

GULFSTREAM - AUTO RIVETOR Total 1

GULFSTREAM - FAC EQUIP Autronics Corporation 1

GULFSTREAM - FAC EQUIP Total 1

GULFSTREAM - FAC OPERATIONS Hagemeyer North America Inc 1

Republic Waste Services of Sav 3

Southland W aste Systems of Bru 1

UGL Services Unicco Operations

Purchasing Compliance

Opportunities to potentially use P-Cards

PSG

Oct-06

Count of Invoice Number

Mailing Name Total

Patent Construction Systems 7

Culligan Water Services 6

Nextel Communications 6

Republic Waste Services of Sav 5

W.W. GRAINGER, INC. 5

Cummins Northwest, Inc. 4

Volt Management Corp 4

Applied Air Technology 3

Enrique de la Guardia, MD 3

Purchases Out of Compliance

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Procurement and Finance: E-Procurement

Vendors on line catalogue with picture of item

“prevents order errors thus reduces returns/credits”

Examples of recent support and added value •Demonstrating via webx for any request (e.g. Bid and Reverse AuctionTool)

•Revised approval process for routing PO Change

•Designed the Capital Approval process to meet our policy

•Outreach to UGL Services for input to Road Map

•Bi Weekly status meetings

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Procurement and Finance: Telecom

Cost Savings

– Net annual - $770,000 – Carrier contracts

– Pooling

– Right sizing plans

– Cleanup– Zero use

– Texting

– Excess data use

– 411

Efficiencies/Integrated Mobile – 24/7 support line

– Maintenance

– Purchase

– Blackberry/Email Approvals

– Web Ordering

– Back Office

– One Invoice per vendor per month

– Integrated Accounting

Initiatives Co

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Telecom Initiiative X X

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Procurement and Finance: Pcard Program

• Procurement Card– 885 Cardholders– $15M Annual– 91,000 Transactions annual– $171,000 Rebate Annual– $100,000 Sign on Bonus– AP Savings – 2.5 Headcount

• Travel Card– 550 Cardholders– $2.2M Annual– $25,000 Rebate

• Ghost Cards– 28 Vendors– $5M Annual Spend– $55,000 Rebate

• Controls– Limits– Monthly Reporting– Spot Audits– BOA Fraud Dept

Growth of Pcard Transactions

10,000

15,000

20,000

25,000

30,000

Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111

Pu

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ases

0%

10%

20%

30%

40%

50%

% o

f T

ota

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P T

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sacti

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Pcard Volume Pcard as % of AP Transactions

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Procurement Card Program X X

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Procurement and Finance: Vendor Mgt System

• Web based self service for suppliers and internal buyers

– Interfaced to ERP

– Self registration : Suppliers in Waiting

– Sophisticated search tools

– Location

– Diversity

– Capabilities

– Geographic coverage

– Suppliers can self manage their ongoing information

– Service capabilities

– Remit addresses

– Compliance documents

– CONTACT information !!!!!!!!!

– Vendor Management and Compliance

– Building ability to track vendor KPI’s

– Ability to record vendor performance

– Report on missing documents and insurance expiration

– Ability to screen capabilities before making the investment in contact

Initiatives Co

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Vendor Management System X X X

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Finance and Procurement/Efficiencies

Insert Geographic coverage picture

Procurement and Finance: Vendor Mgt System

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Procurement and Finance: Vendor Compliance

• Problem– Growth in Services E2E brings a challenge to manage risk

– CRE

– Maintenance

– Customers looking to shift risk from their corporation to service providers

• Solution: Systemically Track Documents using VMS– Certificate of Insurance

– Manage risk and exposure

– Insurance requirements vary by service type

– Sub contractors required licenses

– Supplier Diversity Certificates– Manage certificates by expiration and type

– W-9_USA– Validate all USA vendors W-9 against IRS database

– WSIB_Canada– Workplace Safety and Insurance Board (Certificate of Clearance)

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Compliance Program X X

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Procurement and Finance: Sustainability and Social Responsibility

• Green Programs–Certification

–Green supplies and equipment

–Innovation

–Tradeshows and Training

–Diversity Program

–Policy

–Reporting

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Sustainabilty and Social Responsibility X X

Green cleaning can play a key role in facilities maintenance, where a clean, attractive, healthy work environment is essential in attracting and retaining customers and occupants.

Green Cleaning means the use of products and services that have a lesser or reduced impact on human health and the environment, when compared with competing products or services that serve the same purpose

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Procurements Role in Green Cleaning

•Work with suppliers to create a specific preferred product and equipment list to use in Green Cleaning programs•Organization Regional Tradeshows showcasing Green Cleaning capabilities

• Supplier funded• Customer attended• Employee training

•Work with suppliers to bring new products and equipment to market

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• Opportunity: Innnovative Solutions, be first to market with the deployment of ec-H2O™ technology in walk behind battery operated equipment

• Process

– Trials for 3 months

– Standardization of UGL Services Unicco Operations battery floor scrubbing equipment

– Canadian extension

– Deploy in catalogs

• Results/Benefits

– Customer Satisfaction

– Clean dry floors

– $65k in chemical cost avoidance

– Differentiator in customer rfp’s

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– Implemented late 2008

– Objective:

– Meet customers’ growing expectation that we maximize business opportunities for Small Businesses and Diverse Suppliers including minority and woman owned enterprises (MWBE)

– Support diverse suppliers in ways they can scale their business to grow with us

– Mentoring programs

– Training

– Goal:

– Bring advocacy, accountability and credibility to an important and ever-expanding purchasing function

– Year over Year improvement

– Process:

– Tracking is integrated into the on-boarding process

– Suppliers self certifying or 3rd party certified to their diversity status.

– Results

– Greater than 15% of our supplier and contractor spend falls into one of the diverse supplier categories, and the total is growing every month.

Diversity Program

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• Existing Clients– Increasing requests for diversity tracking

– Reporting requests by clients

– Report only on specific to diverse groups

– Supplier Diversity also offers a way for UGL Services to align with our customers’ social responsibility objectives.

– Kitting supplies for Bank of America– Example here ---------------------

• Potential Clients – RFP– Customer drives goals based our billing to them

– Participate with client at minority vendor fairs

– Supplier diversity strategic sourcing plan

– Detailed reporting with required formats

– Mentoring Programs

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Procurement and Finance Startups

In itia tive s Co

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N ew C o n tr ac t S ta rtu p Pr oc e ss X X

Job Start Up Procurement

Pcard

Adm

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-Pro

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Manager

Com

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Specia

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Acct M

gr

Identifies Procurement Roles @site

CommunicatesRoles to SSC

Creates PO forStart up supplies

Creates capital req for equipment

Contacts localRep for Uniforms

Monitors /expedites order-troubleshoots

availability issues

Sets up-buyers and

approvers

Prvides training support of e-procure users

Identifiessubcontractors

Send on-boarding letters to suppliers

Issue CardsSet up Manager

reports