Blog

Leveraging Technology to Procure Relocation Services: Best Practices

November 4, 2010 by MSI

As anyone will attest, over the past two years procurement has become more and more engaged in the evaluation and selection of an organization’s relocation and/or global mobility partner. What this has meant is a significant increase in the number of requests for information (RFI) and requests for proposal (RFP). From our vantage point, this has been a real positive, providing our company with the opportunity to engage with more prospective clients and have an equal playing field to demonstrate our value versus the competition.

As the number of RFIs and RFPs has increased, we have also witnessed the expanded use of various technology tools to collect the information requested. While some companies still issue a hard copy RFP in Microsoft Word, an increasing percentage are using Microsoft Excel or an online resource such as Ariba or Iasta to serve as the data portal for responses.

From the responding company’s perspective the online tools often simplify the process, provided that they are formatted properly, but other times the process is arduous because of the restrictions placed on the response format or medium. For example, a growing trend is the use of Microsoft Excel, which from the organization’s perspective allows them to separate, compare and disseminate information quickly once they receive the completed proposals. The key element in using Microsoft Excel, however, is that many companies are now restricting the cell size, which prevents the responding company from providing a complete response. The same example applies with the use of an online e-procurement tool, such as Ariba. Often times the individuals building and formatting the RFP in the tool or in Excel are members of the purchasing department and their primary point of reference is the procurement of a commodity such as copy paper or laptops. The challenge with relocation is that it’s a service and in order to effectively evaluate the potential suppliers, customization is required.

Another immense challenge for the responding companies lies in the area of pricing. As the project management of the process transitions to procurement, we are participating in more and more reverse auctions. Unfortunately, due to the fact that there are often several pricing options in the area of domestic relocation and global mobility, this is just not an effective methodology for this service. Relocation management companies offer fixed fee, bundled and a la carte pricing and certain services, like household goods transportation, have discounts, while others, such as long-term assignment management may have monthly fees and not transactional ones. A best practice for pricing is for companies to request a pricing proposal, typically in Word or Excel, and then schedule 30 minute calls with each potential relocation management company to review the pricing and conduct a brief question and answer session.

While the use of technology in relocation procurement can make the process more effective and simplified for both the corporation and the relocation management companies, it must be customized based on the elements of the industry and the services provided and not just replicated from a traditional corporate procurement process.