This month we are pleased to profile Nicolas Passaquin (Global Head of Sourcing Delivery) of Thomson Reuters on the role off-shoring has played in their Sourcing transformation. Nicolas has been at Thompson Reuters/ Reuters since 2003 and previously worked for Numico and Air France.
What was the problem?
“After Thomson acquired Reuters in 2008, we needed to evolve the Sourcing organization to meet the needs of the new integrated company and take sourcing effectiveness to the next level. Above all, we needed to change our delivery model. With our resources scattered across the globe, everybody was trying to do everything themselves – Whilst we had a centre led model, we weren’t managing the pipeline centrally. For example, UK Sourcing staff were spending only 60% of their time working with stakeholders and suppliers on critical projects and the rest of their time on low value/low risk sourcing work.
The major challenge I had in 2012 was to achieve higher targets with fewer resources! At that stage, we had fewer than 200 people in the team and the scale of spending was around US$4bn. The challenge was to double our savings delivery with no budget for extra people.
So what did you do?
There were two main drivers for the changes we wanted to make. Firstly, decrease our own procurement budget; secondly, improve the effectiveness of our current resources.
We set ourselves an objective to cut our sourcing operating cost by 20% and to spend 30% more time on strategic sourcing activity. Our plan was to reinvest any extra savings we made into hiring key resources with specific expertise to strengthen the team.
It was vital that we created opportunities to centralise – so initially we concentrated on tactical buying (all purchases under $100,000). We already had an Indian operation in Bangalore so we wanted to leverage that. We soon discovered that this centre could not provide the language skills we needed to support the whole of Asia so we also built a team in Beijing, and then began gradually transferring our tactical buying to these locations. Initially we envisaged that these teams could also support our American operations but the time zone difference made it pretty difficult, so learning on the job!, We opened a third tactical buying centre office in Costa Rica. Despite these unforeseen challenges we made a solid start with the equivalent of 15 people moving to an off-shore location – freeing up operational budget to hire experts and provide training in both London and New York.
Our next move was more complicated – we moved some low risk sourcing activities to Bangalore, backed up by operations in Costa Rica. These teams now manage planning, tendering and contracting of some sub categories such as memberships and subscriptions. As these operations are working so well we are now looking to use the teams to improve contract management and compliance. For many low risk categories, the only way to buy these is through the support centres who are channelling global spend to preferred suppliers. For example, we’re eliminating maverick spending in areas like accommodation and IT software/hardware. This might mean ensuring that we find the most cost-effective hotel for a business trip or using an approved re-seller of computer hardware.
How did it work?
Today, we have around 20 colleagues working off-shore for an overall sourcing team of 115 employees.
In terms of results, we are really delighted. Our stakeholders rate the satisfaction with our service at 4/5 and we’ve beaten our savings target by a big margin returning 2.5 times our original target. In addition, we have an excellent platform for centralising activities, developing new talent and diversity of our talent pool and supplier base.
Going forward, we will be focussing on linking the teams better with the business to facilitate more early engagement. We are also prioritising more ethical sourcing activity and wanting to use the off-shore team to resource more project work.
What did you learn personally?
Personally, I’ve learned a great deal. In particular, that location can be a significant challenge – we certainly underestimated the difficulties of time-zone differences, language and culture. Having said that, 95% of this project is now achieved - we’ve made a significant shift and are always seeking continuous improvement. I think the key has been finding the right people to take us there.
I’m proud of the legacy I’ll eventually leave behind here at Thomson Reuters. The shared services operation is now embedded within the organisation.
Lastly, what would be your advice to others doing something similar?
My advice to others in similar scenarios would be to never underestimate the importance of communicating what you’re trying to achieve – so that everyone understands their own role and gets on board. Plus, hiring the right people is crucial for retention and overall success.”
Future Purchasing Response:
Listening to Nicolas we have seen how Thomson Reuters embraced the extra challenge they were given as an opportunity to do something really different. Whilst the savings target looked like the big hurdle, actually focussing on customer service in diverse locations has provided so many other benefits like building a diverse global talent pool offshore and enabling on shore procurement to be more strategic by using savings to fund key hires in Europe and US. With stakeholders clearly satisfied and savings target exceeded for Procurement at Thomson Reuters, the only way is up.
Do you have experience of offshore procurement shared service centres or other procurement transformation? Let us know in the comments below.
If you would like to appear in our Change Makers series for any change or transformation activity that you have lead or been involved with, please contact Anna Del Mar directly for details here .
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