Capita’s procurement solutions team is helping a global financial services organisation to reduce its spending, get the best value for money from its supply chain and gain full transparency of its costs – delivering more than £20m in savings in the first year while freeing up its people to work more collaboratively and flexibly.
Despite having been around for hundreds of years, our client was held back by its immature procurement function. Its end-to-end sourcing processes were decentralised and poorly managed, resulting in chronic over-spending across the organisation. We’re combining specialised technology and our procurement expertise to apply 21st century efficiencies to its procurement activities.
Our task was to deliver 10% P&L savings by 2021, underwritten by a guaranteed return on investment.
1. Procurement diagnostic
By running procurement diagnostics with the client, our procurement specialists used sophisticated analytics tools to identify cost saving opportunities and to periodically review the organisation’s procurement maturity, resulting in both savings and transformational activities.
2. Supplier consolidation
We’re eliminating wasteful spending and improving commercial terms by halving the number of suppliers that the client deals with. As part of the new procurement strategy, the client has identified preferred suppliers and consolidated procurement contracts to achieve better economies of scale.
3. Service improvements
By simplifying processes and putting better purchasing controls in place, our client gets better prices for goods and services. Capita led the sourcing, commercial negotiation, contracting and implementation of a global enterprise resource planning (ERP) system covering finance, HR and procurement. The ERP system is enabling our client to manage its spending in a more collaborative and controlled way, reduce costs and manage departmental budgets more effectively.
The ERP provides one unified system, connecting several previously disparate parts of the organisation and makes spending more visible across the organisation by capturing all third-party spend in one place. It’s also making data more secure, combining transactions and payments initiated in the same system and giving our client tighter control of its supply base.
4. Flexible resourcing
One of the procurement function’s greatest stumbling blocks to maturity was its lack of resources. We’ve deployed 15 talented people into the procurement team, most of them full-time, to support increased workload and demand, and we’re providing subject matter experts who the client can call on when needed.
5. Managing tail spend
The organisation wasn’t managing tail spend proactively. We implemented an online portal that’s now handling all of its purchase requests below £100,000. This helps to increase contract coverage and improves the organisation’s buying strategy.
6. GDPR remediation
Like all financial services providers, our client handles vast quantities of sensitive customer data. Protecting such data is paramount, and any unsecured supplier contract presents a significant data governance risk. We’ve helped it to remediate 70 high-risk contracts, ensuring that sensitive data is handled correctly and safely.
7. The impact
The results so far are better than we could have anticipated – the pace of delivery and the level of savings achieved are remarkable. The team conducted a procurement diagnostic as the starting point and delivered significant quick wins in the first three months and more than £20m in savings in the first year.
We’re helping our client to transform not only the way it delivers procurement but also how it perceives the function. What had historically been viewed as a box-ticking exercise, held in low regard, is now seen as a crack team of indispensable experts with value to add and the ability to free up individual departments to focus on building vital relationships.
Our client is reinvesting the savings that the improved procurement function delivers in transformation programmes that are improving its employees’ working lives and conditions. One such programme is providing connectivity and equipment to enable employees to work remotely - this was delivered in time to keep everything running smoothly during the Covid-19 pandemic. The programme is also transforming the workplace, making it more connected, flexible and collaborative to increase employees’ wellbeing.
Our work for our client doesn’t end here: we’re still helping departments from finance to Brexit, marketing to corporate real estate to save a great deal of money and are working alongside them to put strategies in place that will keep the good work going.