How Levi Strauss & Co. selects software for its services buy

Procurement services uses this four-step sourcing process:

1. Identify processes per department
Goals:
• Identify stakeholders
• Identify process gaps among departments
• Determine best practices

What they found:
• Reluctance to change
• Very decentralized
• Stakeholders varied

2. Supplier evaluation and selection
Goals:
• Identify thought leader in market
• Identify provider with strong domain expertise and best practices around light industrial
• Provider with a full-service or self-serve option
• Find a solution with strong technology that can support multiple service categories

What they found:
• Few providers with light industrial functionality and experience
• IQNavigator provided ad hoc reporting
• Vendor neutrality is important
• Selected IQNavigator

3. Roll out/change management plan
Goals:
• Phased roll out
• Contingent workforce service category for light industrial initially
• Seamless transition to achieve strong user adoption

How they did it:
• Obtained buy-in from stakeholders
• Communicated value (benefit over replaced technology and process)
• Conducted several training sessions

4. Ongoing activities
Goals:
• Measure program success
• Look for opportunities for further program optimization
• Expand to additional service categories by leveraging existing technology platform

How they do it:
• (Immediate) Successful supplier switch with process and technology improvement; easier to use, better reporting and resulting analysis
• (Quarterly reviews) Review program to measure savings and process efficiencies; discuss industry best practices and new functionality to further optimize current program

Automating the Services Buy

The procurement services operation at Levi Strauss & Co. (LS&CO.) in San Francisco has consolidated the company's temporary labor buy and now uses software to streamline the requisition process for workers and to gain visibility to the multimillion dollar annual spend. Perhaps more important, the software provides purchasing with detailed reporting that promises to help in future negotiations with suppliers.

Founded in 1853, LS&CO. has three apparel brands: Levi, Dockers and Levi Signature Series. In addition to its headquarters in San Francisco, LS&CO. has a financial service center in Eugene, Ore. With annual sales of $4.1 billion, LS&CO. sells its products in more than 110 countries and employs 8,850 people.

Until 2002, LS&CO.'s temporary labor buy was not centrally managed. Like many companies, managers hired temporary workers when they needed them, usually from local suppliers. The purchasing operation had little involvement in the buy. Then, procurement services spent time processing requisitions for each temporary worker LS&CO. hired. The accounts payable department was equally occupied, processing just as many invoices for payment to temp labor suppliers.

"We were decentralized," says Betty Stewart, project manager, procurement services for LS&CO. "We had little visibility into the spend." Stewart, who has been with LS&CO. in Eugene for more than two years, is responsible for systems implementation and process improvement for the purchasing operation.

Procurement services realized that automating the time card and approval process with software developed specifically for that purpose would centralize and consolidate the requisition and invoice process for temporary help workers. "It was a natural extension of other e-procurement initiatives we recently completed," says Jim Butler, director of procurement services.

Stewart sees use of the ad hoc reports provided by software as perhaps the most important reason to implement such a vendor-management system (VMS). "A VMS tool gives us visibility to ensure that we are being charged the correct mark-ups for different position categories once we develop contracts with suppliers. It also provides us data on length-of-stay compliance to help minimize risk. And we wanted to be able to track service levels outlined in our agreements with suppliers."

LS&CO. initially implemented software for the temp-labor buy in 2002. Procurement services negotiated agreements with two suppliers, Venturi Staffing Partners of Cincinnati and and Manpower of Milwaukee. Venturi services the company's San Francisco location while Manpower provides workers to its 20 U.S. field locations. Venturi provides LS&CO. mainly with workers trained for management/accounting/ finance/admin positions as well as models needed for the retail company's marketing and advertising campaigns. Manpower provides LS&CO. with light-industrial workers for its four distribution centers as well as nationwide merchandise coordinators who visit retail outlets to ensure that the company's displays are well represented.

After deploying the software, procurement services quickly learned that the tool did not appear to be a good fit for the company. "It didn't address some business process issues as we would have liked," says Stewart. "We needed an easy way to track staffing of light-industrial workers at our distribution centers." These workers may be hired for one position but actually handle other tasks in a single day or week. These positions may pay different rates. To add to the complexity, there are also shift differentials and overtime pay to consider. The company also wanted to automate its time-card feed process.

Going back to the drawing board, procurement services solicited information from three well-known software providers in the industry. The buyers met with the providers who demonstrated the functionality of their tools for streamlining and automating the process for purchasing such services as temporary help. Ultimately, they selected IQNavigator of Denver as their new supplier. Compared with the other potential suppliers, Stewart particularly liked the company's ad hoc reporting capabilities.

LS&CO. had the IQNavigator software up and running on January 31, 2005. Since the company had already been using software for its temp services it did not run a pilot test of the new tool. "It was a seamless transition," says Stewart, who was responsible for the implementation. "We didn't have many process changes. We simply migrated our suppliers and the users who were already familiar with the tool we had had in place." She adds that procurement services did not take such "a big-bang" approach with the first deployment because of potential risk-management issues. They ran a pilot with one temp labor supplier that serviced one location.

While procurement services' internal customers-mainly hiring managers-were reluctant to use the original tool when it was first implemented in 2002, they reacted positively to the deployment of the software from IQNavigator. Both the hiring managers and the company's temp-labor suppliers are especially pleased with the software's capability to streamline and automate the time-card submittal and approval process. They can complete the approval process without having to log-on to the IQN application. "Being able to approve timecards through MS Outlook e-mail is huge from a user standpoint," says Stewart.

For the temp help suppliers, the software is capable of automatically feeding information from time cards directly into their back-office accounting systems, a primary benefit as it eliminates the need for employees to manually key in the data.

To hire temporary workers for certain positions in the company's warehouses, procurement services first set up a decentralized requisitioning process. Under this model, hiring managers were expected to use the tool when they needed workers. This didn't work out, Stewart explains, because the managers did not use the software often enough to become familiar with it. Next, they tried a centralized model that was set up with six requisitioners. This too was not successful. Finally, they created a model with one central requisitioner who charges back the cost of hiring the workers to individual cost centers.

The LS&CO. employees who serve as central requisitioners require the most training, says Stewart, who was responsible for ensuring that they were able to proficiently use the software. She also provided training for hiring managers and time-card approvers. IQNavigator provided training for the temporary help suppliers.

More important, she says, is a strong internal help desk. "To ease the transition to the IQNavigator product, it was vital that everyone—both at LS&CO. and its temporary help suppliers—knew who to go to get answers when they had questions." The LS&CO. help desk acts as liaison between its employees, suppliers and IQNavigator.

SOURCE: LEVI STRAUSS & CO.