We’re helping a European manufacturer to transform its indirect procurement, drive operational and cost efficiencies, saving more than 7% of indirect spend so far, and to provide its employees with better operational insights and information.
Our client’s operations across 70 countries are traditional and decentralised, with each of its six key regions operating independently. This means that it had multiple suppliers of services such as document translation, cleaning, fleet cars and mobile connectivity for smart product and mobile phones. It needed to simplify and improve its procurement processes, and the board had set high cost savings targets for the whole organisation.
So in 2012 it asked our procurement experts to help it to transform the delivery and management strategies for specific categories of procurement spend: facilities management, logistics, travel and fleet, office supplies, utilities, IT and telecoms, research and development, and marketing. In each category, we’re helping it to identify savings and to put in place the tools and processes needed to achieve them.
Our client wanted our help to strengthen and centralise its supply chain. So we collaborated closely with them to manage the procurement function’s transformation, encouraging stakeholders across the organisation to see the advantages that the project could bring.
Once the project was underway, we consolidated the suppliers of various services. For example, we reduced 19 separate suppliers of cleaning services to one, saving our client 26% on its annual spend. By introducing automated translation technology, pre-programmed with a bespoke lexicon of industry-specific terminology, it reduced 14 suppliers of translation services for technical documents to one, almost halving its usual annual spend. Overall, we reduced its number of suppliers by 25%.
By consolidating our client’s automotive fleet with a single provider but retaining the agility to react to varied demands, we were able to achieve more flexibility to satisfy requests and better discounts , which were reinvested in larger and better-equipped cars for the company’s sales employees.
This reduction in the number of suppliers also vastly reduces the amount of time spent on administration.
We set up a contract management system connecting the regional offices, giving their procurement teams a view of all their supplier contracts. This allows them to look up preferred suppliers for a range of services and to track key performance indicators to make sure that what is agreed to is what gets delivered, in the timeframes agreed. It helps teams from different regions with contractual discussions enabling them to work more collaboratively, resolving common issues, reducing risks and improving processes, which has achieved a significant improvement in cash flow.
We also implemented the tools and process to enable connectivity to our Client devices Over-The-Air. We worked with our client’s R&D team to support digitisation of their product using the best connectivity strategy to meet both the manufacturing volumes and also provide the flexibility required within their products, all this without compromising on future digital strategy or supplier choice.
Equipping their products with industrial-grade SIM cards enables employees to diagnose issues with products before an engineer visits the site. The information that these connected devices send to base lets engineers know when customers should carry out preventative maintenance or if a product has faulty parts that need repairing or replacing – cutting down on the need for repeat site visits.
This technology makes the information available wherever the product is – whether in or outside the EU.
The procurement teams are also benefitting from increased communication and collaboration, both internally and with the wider organisation, freeing up other business units to focus on customer experience and delivery. They now have clear, well-defined policies, tools and information, giving them the control and visibility that they need to make informed decisions about how they spend their budget and manage their tail spend.
We also helped the business in France improve service and reduce operating costs through the approach for provision of temporary workers. This has been a great success during the pandemic, enabling the business to flex resources up and down as required and respond to client demands.
We’ll keep creating procurement opportunities to help our client to save money they can reinvest in better serving their customers and growing their market share. To find out how we can boost your procurement function, save you money and improve your customers’ and employees’ experience, take our five-minute online procurement maturity assessment for your free report.