At A Glance
An American financial services company with over $1.5 Billion in revenue hired us to drive transformation in its purchasing practices by designing and implementing a best-in-class Procurement strategy.
Objectives
Design & implement a best-in-class procurement strategy which includes:
- Industry-leading spend taxonomy for all third-party spend
- Procurement policy and processes
- Third party risk management program
- Supplier relationship management program
- Best-in-class sourcing, negotiation and contracting methodologies
Results
- Identified and delivered savings opportunities of ~ $17MM over a period of 24 months
- Improved process efficiencies and redundancy elimination
- Comprehensive risk management framework, best in class contract management methodology
- Established long-term plans to drive innovation and continuous improvement through supplier relationship management
- Reduced the total number of suppliers in the client’s organization by 15%
Through An Initial Current State Assessment, We Determined Procurement Maturity To Be Low
- Procurement considered non-strategic
- Not leveraging enterprise wide spend with vendors during negotiations
- Multiple disparate systems & tools leading to poor spend visibility
- Non-existent category strategies / playbooks across most categories
- Lack of contract compliance and best practices
- No active third-party risk management procedures
- Lack of standardised processes & policies
A Comprehensive Procurement Solution To Enable Strategic Value Creation
An American financial services company with over $1.5 Billion in revenue hired us to drive transformation in its purchasing practices by designing and implementing a best-in-class Procurement strategy.
Consolidate spend data from various sources like AP, T&E etc. Normalize spend classification and analyze based on supplier, subcategories and region. Identify strategic suppliers by using Pareto principle.
Conduct interviews with key stakeholders to understand existing processes and projects. Leverage spend analysis with stakeholders’ inputs to identify sourcing opportunities. Create a sourcing roadmap including prioritized list of opportunities with savings estimates and timelines.
Develop long term category strategies for all in-scope categories, perform spend analysis, contracts analysis, external analysis and recommend an effective sourcing strategy for each category.
Provide procurement expertise, tools, templates, best practices and benchmarking information to help transform client’s procurement function including people, processes & tools to best-in-class. Support overall transformation program with effective change management techniques
Execute sourcing initiatives identified in the roadmap. Projects can include direct negotiations, RFP, demand management etc.
Building Client's In-House Capability Through A Transformation Across People, Process & Tools
Further, we helped the client transform its people, processes and tools to establish a sustainable, industry leading procurement function. This enabled them to get on pace to realize incremental savings each subsequent year, reduce risk and gain competitive advantage through a strategic procurement function:
People
- We conducted multiple training for all key stakeholders to introduce new processes, drive awareness and ensure compliance
- Recommended ideal procurement organisation structure by leveraging industry benchmarks based on spend and savings
- Clearly defined roles & responsibilities across all procurement processes & procedures
Processes
- Bench marked and performed a GAP analysis across all procurement processes and recommended future process flows
- Streamlined the procurement policy, clearly outlining number of bids required, spend thresholds and delegation of authority to execute contracts beyond certain spend value
- Established robust mechanisms for supplier relationship management with continuous monitoring
- Established industry leading third-party risk management framework for vendor on boarding and performing ongoing risk monitoring of vendors
Tools
- Introduced a best-in-class spend classification taxonomy suited for financial services companies leading to sophisticated spend analysis capabilities
- Setup a central contracts repository to enhance visibility across the contract life cycle and drive strategic benefits
- Worked with the client’s legal team to develop a comprehensive clause library containing industry leading terms and clauses
- Established a database of market intelligence and pricing benchmark information
- Introduced standard templates and toolkit for supplier segmentation, supplier relationship management, category strategy, RFP’s and negotiations
Identifying & Executing Savings Opportunities In A Phased Approach Enables Immediate Bottom-Line Benefits
We started with implementing a 3 phased approach to streamline procurement activities, reduce inefficiencies and deliver savings to the bottom line:
PHASE 1
Business Operations Review & Opportunity Assessment (4 Weeks)
- First, we performed a comprehensive assessment of current business processes
- After the current state assessment, we conducted an extensive opportunity assessment exercise to identify key savings areas using spend analysis, contracts analysis and stakeholder interviews.
- The deliverable was a prioritised list of sourcing initiatives with timelines and savings estimates
PHASE 2
Category strategy creation (6 weeks)
- Completed an in-depth analysis of all in-scope categories including a thorough spend review, contract analysis and bench marking exercise.
- The results were used in combination with our extensive market intelligence to design a best in class procurement strategy for each category.
- The deliverable included a comprehensive category strategy deck for each category.
PHASE 3
Sourcing execution for in-scope categories (24 months)
- Implemented multiple sourcing projects across in-scope categories starting with quick wins and eventually moving to more long-term strategic value creation projects.
- Provided best in class sourcing practices, RFPs, negotiating expertise and contracting support
- Real savings delivered to bottom line along with reduced overheads due to consolidated supply base
- Monthly steering committee meetings with participation from procurement & finance leadership
- Collaborative effort by cross functional teams including members from business, legal, finance and IT
- Best in class project management to track project ownership, project status, savings estimates & realized savings
- Quarterly refresh of category strategies based on industry insights and market trends
