European financial services company
Our experience...
We were asked to develop a centralised support function with a consultative approach to deliver against the following aims:-
- establish and embed a ‘Best In Class’ procurement culture across the organisation through the development of a procurement policy, processes, documentation and templates;
- provide strategic sourcing support for stakeholders and deliver an in-year cash benefit of £2.1M and an annualised cash benefit of £3.5M which represented a saving of 10% of the £35M of spend reviewed;
- reduce risk in the supply chain by introducing a robust due diligence process for third party suppliers; and
- increase visibility and transparency within the supply chain through the introduction of a Contract Management system and the development of effective Supplier Relationship Management.
Our approach…
Our consultant identified key stakeholders for each initiative and carried out a detailed requirements discovery exercise and developed individual project plans.
Stakeholder engagement was vital throughout the process. As subject matter experts their involvement in the process was key to the success and sign off. Key influencers were members of the Organisational Leadership Group where we worked closely with the Head of Facilities Management, Head of Business Change and the Group Finance Director.
Our consultants provided structure and decision support to stakeholders but it was important that they felt that overall ownership remained within the budget area. By involving them in the process we ensured that they felt ownership of the process and developed a deeper understanding of the marketplace and the sourcing process.
The initial mobilisation stage involved a detailed review of spend data, internal process review, external market review and requirement definition. Once the mobilisation stage was completed; sourcing projects were prioritised in line with contract end dates and our consultants engaged with stakeholders from across all parts of the organisation to obtain sign off for the sourcing strategy. Once approved we commenced our market review through formal structured Requests For Proposal. Once the supplier had been selected we managed the commercial negotiations and finalised contractual terms.
Best practice…
We provided a team of consultants with a deep practical knowledge of procurement, our consultants were quickly able to benchmark existing practices and produce a gap analysis against best practice.
By calibrating to industry best practice procurement principles we developed robust “Best in Class” procurement processes which matched legal and regulatory requirements with the commercial requirements of the organisation.
As an example, the introduction of a seven-stage strategic sourcing cycle resulted in:-
- the development of closer working relationships with subject matter experts and business areas to produce tender documents with clearly defined requirements and selection criteria;
- a standard selection process for new suppliers through formal tendering resulted in the selection of suppliers who not only provided the best commercial offer, but clearly meet the defined business requirements. This wa demonstrated by high levels of satisfaction across the organisation with the suppliers selected;
- the introduction of Supplier Relationship Management through the introduction of Service Level Agreements, thereby ensuring that service levels were maintained throughout the life of the contract and that value was not eroded; and
- the introduction of standard templates and standard legal contracts was the product of a close working relationship with Legal Services.
Organisational benefits…
One of the main focuses was the delivery of the cost reduction targets of an in-year cash benefit of £2.1M and an annualised cash benefit of £3.5M. Our consultants significantly exceeded their savings targets by almost £500k.
The definition of a clear savings recording methodology was an important factor in ensuring that the benefits are tracked and budgets adjusted accordingly, therefore ensuring that the savings delivered were not diluted by budget overruns elsewhere. The Project Sponsor was the Group Finance Director and we developed a strong working relationship with him and his team through weekly benefits tracking meetings.
