Vendor Management & Negotiation

Vendor Management & Negotiation

Objectives:

• Identify which vendors to manage
• Enhance relationships with vendors
• Ensure vendor performance
• Exercise your rights
• Monitor vendor obligations
• Learn to use Key Performance Indicators (KPIs)
• Implement an effective vendor management system

Course Outline:

Introduction to Vendor Management

• Introduction
• Reasons companies decide to use a vendor
• Type of vendor services
• Overview of vendor management process

Different Vendors for Different Types of Plans

• General benefit vendors
  1. ERISA counsel
  2. Auditors
  3. Communication
• Retirement plan vendors
  1. Recordkeeper
  2. Trustee
  3. Investment manager
  4. Financial education
  5. Actuary
• Health care plan vendors
  1. Insurance company
  2. Health maintenance organization (HMO)
  3. Preferred provider organization (PPO)
  4. Claims processing
  5. Disease management
  6. Wellness programs
  7. Employee assistance programs
  8. Health screenings
  9. COBRA and HIPAA notices
  10. Dependent auditing
  11. Claims auditing
• Other plan vendors
  1. Dental
  2. Disability
  3. Prescription drug
  4. Cafeteria plan administration
  5. Cafeteria plan (Section 125)
  6. Flexible spending accounts
  7. Benefit statement
  8. Total benefits outsourcing (TBO)

Preparing for Vendor Selection

• Initial stages
• Assessment of current services
  1. Survey
  2. Focus groups
• Baseline costs and services

1. Needs assessment
2. Scope and objectives
3. Project plan and timeline

• Involvement of other departments
  1. Information technology (systems)
  2. Purchasing or procurement
  3. Accounting/payroll
  4. Finance
  5. General counsel
  6. Union
• Vendor selection team

Request for Proposal

• Role of the RFP
  1. Identifying the services requested
  2. Providing information about the company
  3. Standard basis for comparison
  4. Specific questions
• Writing the RFP
  1. Length of the RFP
  2. Type of questions
  3. Who should receive the RFP
• Setting criteria

1. Who to send it to

Selection Process

• Evaluating RFP responses
  1. Scheduled conference calls with all vendors
  2. Written questions and responses
  3. Answer questions as they are received
  4. Presentations
  5. Determining the finalists
• Interviews
• On-site visits

1. Final decision

Fees

• Understanding the fee calculation
• Investment fees for retirement plans
  1. Mutual funds
  2. Annuities
  3. Actively managed accounts
• Soft vs. hard fees in pension plans
• Additional fees

Systems

• Interaction of systems
• Shared data
• Security and privacy of data

1. System support
2. Internet access

Liability, Indemnification and Fiduciary Aspects

• Clarifying responsibility
• Indemnification
• Multiple vendors
• Fiduciary responsibilities
• Appeals
• Interaction between vendors
• Fiduciary responsibilities

Ongoing Vendor Relationship

• Reports
• Meetings
• Plan changes and modifications
• Service changes
• Auditing
• Evaluation of services and satisfaction

Changing Vendor Relationships

• Changing vendor relationships
• Frequency of opening plan to new vendors
• Review process
• Transition