Location strategies, trends, developments & tips for Shared - PowerPoint PPT Presentation

Location strategies, trends, developments & tips for Shared Services Centers Buck Consultants International Johan Beukema P.O. Box 1456 Managing Partner 6501 BL Nijmegen The Netherlands Josefien Glaudemans P: +31 24 379 0222 Partner F: +31 24 379 0120 E: johan.beukema@bciglobal.com 12 May 2016 E: josefien,glaudemans@bciglobal.com

Welcome! Your presenters today Johan Beukema Josefien Glaudemans Managing Partner Partner Buck Consultants International Buck Consultants International  Buck Consultants International, 2016 1

Agenda 1 Short profile Buck Consultants International 2 Strategic questions for your global footprint 3 Location selection methodology 4 Geographic locations: positioning & trends 5 Some selected tips & tricks 6 Q&A  Buck Consultants International, 2016 2

1 Short profile Buck Consultants International Founded in 1985, Buck Consultants International is a worldwide operating leading, independent location advisor & supply chain specialist  Location studies for new operations (sites/buildings) for headquarters, shared services center, R&D, manufacturing & warehousing  Developing a comprehensive strategic corporate real estate plan , including objectives, trend analyses and identification of regions  Supply chain strategy, network design and optimization  International business planning (including market research, industry analysis, and competitor analysis) Atlanta, GA  Project management and implementation Shanghai, CN  Buck Consultants International, 2016 3

Profile Buck Consultants International (BCI) BCI’s Characteristics BCI’s Corporate Consulting Services Focused on adding value Delivering Strategic Solutions to Corporations  Extensive track record in thirty years: International Corporate Business 2,000 projects for 1,500 clients in 40 Real Strategy Estate countries BCI ‘s consultancy  Tailor-made approach services  Supply Cost-effective Site Chain Selection  Businesswise & result oriented  Independent/unbiased   International Business Strategy Fixed time frame   Business Case Scenarios Global reach   International Footprint Modelling High customer satisfaction degree   Investment Decision Making Support 60 professionals  Location Strategies & Site Selection  Market Research & Labor Market Analysis  Hands-on Support: incl. Site Visits  Investment Incentives Support  Buck Consultants International, 2016 4

Clients in High Tech, ICT & Electronics (sample)  Buck Consultants International, 2016 5

Clients in Life Sciences (sample)  Buck Consultants International, 2016 6

Clients in Fashion and Apparel (sample) OAKLEY  Buck Consultants International, 2016 7

Office projects: headquarters & shared services centers  Buck Consultants International, 2016 8

Sample clients in other industries  Buck Consultants International, 2016 9

2 Strategic questions for your global footprint  What are your business drivers for your SSC/back office organization?  What can be gained from implementing new solutions and/or locations?  What are the strategic objectives that play a role?  What are the functions (high level) to be included in your new support organization?  Will we do this ourselves or do we outsource (parts) of the support functionality?  What is the ideal concept? Multi-functional center versus function-specfic?  What is the right scope & scale for these activities?  Do we have a business case? Benefits from optimising your Shared Services organisation Cost savings/ROI Quality improvement Effectiveness of people • Headcount reduction • Better access to support • Consolidation of functions • Efficient use of space • Global connectivity (24/7) • Concentration of know-how • Cross-selling, up-selling, etc. • Standardisation of systems • Productivity improvement (KPI) • Decrease in working capital • Business processes refined • In-company training  Buck Consultants International, 2016 11

Possible footprint configurations Consolidated Configuration Functional Groups Strategic H Q Consolidate multi functions to one or very few locations IT, Operations, Shared Services, X Customer Services Cluster Configuration Functional Groups Strategic H Cluster functions with more Q similar work for profiles and level Y IT, Operations of skills in a network of corresponding locations X Shared Services, Customer Services Distributed Configuration Functional Groups Utilize locations most optimal for Strategic H each function’s profile, skills and Q A IT cost objectives Z Operations Y Shared Services X Customer Services  Buck Consultants International, 2016 12

Geographical business models 1 National markets have 2 Regional markets served by various own/ national centers outsourced regional centers National markets have national centers own/outsourced regional centers Outsourced SSC Captive SSC 4 Regional markets served by own/ 3 Regional markets served by outsourced off-shored centers centralized centers own/outsourced off-shored centers Outsourced SSC Captive SSC Finding the balance in centralization or decentralization is key  Buck Consultants International, 2016 13

3 Location selection methodology Each back office project has its own requirements Shared Services Center Customer Call Reservations Care Center Center Center Finance Business HR Support Support Support Center Center Center Technical Legal Software Support Support Development Center Center Center Center of Innovation … Excellence Center  Buck Consultants International, 2016 15

Site selection process: narrowing down from global to site level Step by step approach Methodology Profile, location requirements Phase 1 & all location options Kick off & Start up: Definition investment profile, skills Project brief sets, location requirements, geographical scope Selection of long list of locations Detail analysis of top 10 locations *) Phase 2 Desk research & Short listing process: Reporting In-depth assessment selected target areas Site visits to top 3-5 locations *) Phase 3 Site visits & Site visits and identification of sites Reporting Phase 4 First negotiations 1 location Conclusions & Phase 5 Recommendations Recommendation: preferred & back up location *) Indicative number  Buck Consultants International, 2016 16

Project specific location criteria In general, the Buck Consultants International approach focuses on the location specific costs, quality and risk factors of the new location Quality factors + + Risk factors Cost factors    Running cost: Labor availability & Political risk employment, occupancy quality  Economic risk cost, transportation  Experience &  Financial risk  Cost to achieve: start up competition  Transparency risk (building, travel,  Labour flexibility  Legal risk recruitment, training),  Language skills  Natural disaster risk relocation & exit cost  Accessibility  -/- investment subsidies  IT reliability & grants  Strategic alignment  Business environment Total inflated Total weighted Total weighted 3-5 year cost attractiveness score risk score (in Mln US $) (1 = negative, 5 = positive) (Low / Medium / High)  Buck Consultants International, 2016 17

Detailed cost location factors example Running cost Running cost Running cost 1 2 3 Total employer’s cost Real estate costs Other YoY cost 1.1 Function x 3.1 Telecom cost 2.1 Total cost (rent & charges) 1.2 Function y 3.2 Management time 2.2 Transition cost 1.3 Function z 3.3 Travel & transportation 2.3 Other cost 1.4 Management 3.4 Other cost Cost to Achieve One time -/- 4 7 Labour Related Investment Incentives Cost 4.1 Recruitment cost 7.1 Capital grants 4.2 Training cost 7.2 Recruitment grants 4.3 Dual running cost 7.3 Training grants 4.4 Travel cost & expenses 7.4 Tax & other incentives 4.5 Relocation / Expat cost Cost to Achieve Cost to Achieve 6 5 Exit cost Build out cost 5.1 Design cost 6.1 Severance cost 5.2 Build out cost 6.2 Loyalty premiums 5.3 Transition cost 6.3 Other costs 5.4 -/- Rent free period Cost are presented as total inflated 3-5 year cost in preferred currency  Buck Consultants International, 2016 18

Framework for incentives/grants/taxes A F Incentives/grants/taxes Investments  Different tax rates/tax Other Energy & Investments regimes in each country environment Energy &  Varies not only per country environment but also per region Land/sites E Taxes B Import/ Technology/  In Europe: Large influence export R&D of European Commission for EU-28 member states Taxes Personnel/ Personnel/talent Technology/R&D talent D C  Buck Consultants International, 2016 19 19