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Managing Vendors In A Rapid Change Environment Ken Horner Senior Vice President

Managing Vendors In A Rapid Change Environment Ken Horner Senior Vice President Strategic Sourcing and Contracts Administration June 14, 2001. AGENDA Background on Washington Mutual Strategic Sourcing Group Managing Vendors Through Mergers. Background on Washington Mutual.

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Managing Vendors In A Rapid Change Environment Ken Horner Senior Vice President

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  1. Managing Vendors In A Rapid Change Environment Ken Horner Senior Vice President Strategic Sourcing and Contracts Administration June 14, 2001

  2. AGENDA Background on Washington Mutual Strategic Sourcing Group Managing Vendors Through Mergers

  3. Background on Washington Mutual

  4. Recent Acquisitions 1996 - Western Bank American Savings 1997 - Great Western 1998 - Home Savings of America 1999 - Long Beach Financial 2001 - Bank United PNC Mortgage Fleet Mortgage

  5. Distribution Network 1996 1999 States 5 40 Financial Centers 309 1,106 Loan Centers 48 430 Households 737,000 5,350,000 Assets $20 billion $186 billion 2001 loans serviced will exceed 2000 by 2-1/2 times

  6. 1995 Strategy • Focus on core competency • Access expertise • Save time and money • Capture market share • Reduce risk

  7. 1995/1996 Outsourced Functions Network and desktop management: IBM Item Processing: EDS Facilities Management: CB Richard Ellis Loan Processing: Alltel Credit Card: Associates

  8. Strategic Sourcing Group

  9. Mission Create efficiencies through expense savings, cost avoidance and service level improvement while achieving superior customer satisfaction

  10. Objectives • Proactive approach to maximizing benefits of size in dealing with vendors (cost savings / service levels) • Coach/partner with company managers to negotiate more effective deals with vendors • Act as an advocate for consistent company negotiating positions • Act as a champion of Supplier Diversity

  11. Client Critical Success Factors • Quality of Work • Ability to Deliver • Adherence to Schedule • Vendor Costs • Flexibility • Change Management • Compliance • Exposure Minimization

  12. Common Misconceptions • Strategic Sourcing Group should have the final decision on which vendor is selected to provide a given product or service • Competitive bidding is always the best method for driving cost down • A competitive bid process is flawed if it is not on a completely equal playing field • Changing vendors will yield immediate benefits if the new vendor offers a better price, better service levels, etc.

  13. Negotiation Practices • “Cowboys” make the worst deals • Bureaucracy is your friend • You really need the right Contract Negotiator • End User Managers must defer to negotiator all the way through the process • Negotiator must report high in organization - direct report to CIO or Shared Services Executive • Negotiator to manage interfaces with Legal, Business Owners, Information Security - must be skilled in negotiating all contract terms and conditions • Authority to negotiate ALL technology contracts - even ASP relationships driven by End User organizations

  14. Managing Vendors Through Mergers

  15. Existing Vendors • Growth expectation clear (resources, savings) • Hard deadline implementations • Risk avoidance • Internal skills required • Tight T&M project management process • Adherence to project methodology • Resist temptations to change existing systems and processes

  16. Acquired Vendors • Establish accountability for each vendor • talk to acquired employees - get the oral history • read every contract • send the right notices on time • know how to recognize need for renegotiation • Renegotiation Situations • their vendor is also your vendor (anticipate this in your own contracts) • no-exit contracts or 100% liquidated damages • there will be vultures - find them early • lotto mentality • return of data

  17. “Occasio” Favorable Opportunity

  18. Rethinking Banking Occasio sets a new standard in retail banking by combining WaMu’s proven sales and service culture with a contemporary look and feel. Its innovative use of people, technology and design elements converge to provide something banks have never consistently delivered: an inviting customer experience.

  19. Technology Elements • Teller towers - you can see the screen • Automatic cash dispensers • Point of sale systems • e-Teller wireless system • Access to wamu.com • Touch screen for product information

  20. Vendor Challenges • Multiple critical paths and resource needs • initially difficult for vendors to appreciate importance of this initiative - not in the routine • expansion of need for top vendor project mgrs • New this, new that, new everything • hardware size and location • wiring approach • devices, interfaces and added security requirements • Fast contract negotiation for new vendors • Forming new vendor-to-vendor relationships

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