Our client, a major financial services company that offers a comprehensive range of financial products and services to meet the needs of individuals, businesses, institutions and government entities, was tasked with implementing cost savings across the organization. As part of this initiative, BarPellam was tasked with reassessing the components of a program, which previously centered on quality and efficiency, to introduce cost as a key program pillar.
The key objective for the cost savings initiative focused on:
- Assessing program data to ascertain if taxonomy needed to be altered to adequately identify cost savings opportunities
- Challenging the client to optimize the supply chain to drive volume to participating agencies
- Identifying cost saving drivers within the program
Program discovery and implementation
To quickly achieve cost savings for the program, BarPellam stressed the following industry best practices to the customer:
- The methodology of allowing hiring managers to manually adjust job titles within the Vendor Management System created an environment that restricted the ability to make rate comparisons to market and/or to other assignments within the program. Hence, a full revision of taxonomy would be required. Furthermore, as part of roll out, training with hiring managers should occur to minimize the occurrence of title modifications.
- Given that the client offered payment cycles that were advantageous to the supply chain, BarPellam stressed that supplier overhead was reduced. Consequently, the mark-up structures that were presented to the client should be more competitive and aligned with industry standards.
- The program did not have limitations on length of engagement. Therefore, an opportunity presented itself to reduce bill rates at a defined threshold.
Key positive results for the program centered on the following:
- Assessment revealed that the program taxonomy could be reduced from 298 to 119 job titles. This enhanced transparency into actual buying practices, while applying the new title mapping enabled BarPellam to target assignments that were prime for rate reductions
- To drive volume to the supply chain, BarPellam recommended that the number of participating agencies could be reduced by 40–50% across all position categories without impacting program quality
- Recognizing that cost containment was a new pillar being introduced into the program dynamic, an emphasis on robust change management was included in the implementation. This included a hiring manager forum that stressed the importance of not allowing direct contact between the suppliers and the hiring manager community, the importance of incorporating demand management principles into the selection process, and the willingness to allow BarPellam Subject Matter Experts to drive the negotiation process. Similarly, vendor forums were held to define supplier expectations and to communicate the results of the supplier optimization effort
- BarPellam successfully implemented a tenure discount of 3% within the program when tenures exceeded one year of service
- BarPellam identified more than $1M in savings that could be acquired within four months by negotiating assignments that had excessive mark-ups. Furthermore, to set expectations around mark up caps within the program, BarPellam introduced contractual revisions that highlighted the maximum levels that would be allowed within the program by position category