Relocation Services: Exploring Sourcing Savings and Aggregation Models

Savings opportunities in relocation services come from several areas. Typically, the largest addressable spend areas (in roughly declining order of size) fall into this pattern for most companies based on specific category profiles: household goods moving, temporary living, relocation services fees, policy-driven costs, property management, spousal counseling, tax gross-ups, storage, special counseling, inspections and appraisals. Within household goods, 15% on average in total savings is possible for organizations of all sizes.

While household goods make up a majority of the pie, you can achieve savings with relocation service fees. And aggregation can greatly benefit savings in temporary living, inspections, and appraisals too. Aggregation (leveraged contract providers) can help drive down cost in a range of these areas, including a company's policy and tax gross up methodologies.

In this market, the aggregator packages demand for very specific services across dozens to hundreds of companies. Not unlike a GPO in healthcare, the aggregator isn't compelled to make volume commitments to its suppliers, but it may. The best aggregators are united in their insistence that they are not compelled by suppliers to make such commitments; the quality of their company roster and the demand estimation methods they used were more than adequate to secure the deepest of discounts. Dealing with established aggregators clearly has its benefits too. The more credibility they have with suppliers, the better deal they can offer.

In selecting an aggregator, it is important to consider how strong of an understanding the provider has of their specific category as well as the inner-workings of the industry. Mobility is "high touch" and "highly visible" within companies. It is particularly important to align with a service provider that can provide the wide array of services required and, most importantly, be "best-in-class." At the same time, cost must be contained, and the provider needs to be in a position where they can make a profit to sustain their business, including the program provided. It can be a real balancing act, but it must be sustained over the long haul in order to achieve program success.

This post is based in part on the following Spend Matters Perspective: Relocation Services or Mobility Services: What's in a Name?. We invite readers to download the full paper to explore the topic further. Our analysis includes a supplier shortlist and explores the top spend areas to address within the category.

- Jason Busch

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