Procurement GPS

The Challenge

The organisation was a predominantly national company, at that time beginning to develop a global footprint within its industry sector. A drive was initiated by Procurement to lead the provision of third-party spend. However, the weak history of the function meant that there was a lack of understanding of what was being offered and an unwillingness by the organisation's senior management team to release control of high-value spend categories to Procurement.

The Solution

The Senior Management Team were engaged in a series of dialogues to help them understand what was being proposed and to agree ambitious, but achievable, targets that could be delivered through beachhead (proof of concept) projects.

After scoping the projects, the GPS Tool was used to identify the key processes that would need to be developed. The interdependencies were then factored in to provide visibility of the scale of development involved and to ensure that the chances of success were maximised.

New ways of working were implemented on a trial basis and used to validate the process changes and deliver the objectives of each project. A major part of the approach involved integrating other functions into the project activities. Underpinning the approach was a small management team that ensured the availability of moderate resources and infrastructure during the operational phase.

Regular communication with the Senior Management team and other stakeholders meant that it was much easier to implement the necessary changes to both ways of working and the solutions generated than had been anticipated.

The Results

Initial cost-saving targets were set at double digits. These were then revised upwards after initial investigation and then revised up again after engaging a new supplier to exceed 20%. In addition, the new supplier was able to offer a complete solution and so the approach moved from one of receiving products to one of receiving an outsourced service.

As the new supplier was looking to enter the national market, agreement was reached on preferential rates and rebates based on the magnitude of market penetration achieved over a given time period. This resulted in a significant revenue stream into the organisation, further offsetting costs of supply.

Due to the success of the approach, the category strategy development process was standardised and replicated across a number of other areas of the business yielding a number of significant contributions.

Back to Case Studies

Login

Forgot password?