Transformational sourcing in the telecoms sector

Business Situation

Solution Implemented

Benefits Delivered

• Supplier relationships transactionally focused with no improvement or collaboration.
• No clear understanding of complete supply chain or market dynamics.
• 18 months of competitive bidding activity with no contract award.
• Incomplete information available for internal/external resource allocation.

• Spend segmented into skill categories and also key business processes.
• 50 strong cross-functional team of technical and sourcing people built in non-collaborative culture.
• 1-3-5 year strategy created and implemented that involved the creation and selection of an alliance solution.

• More than 200 implementable opportunities generated, including £11m of quick wins.
• Strategy delivered 22% cost reductions over 3 years on a £750m cost base, with 5% cost-out in
  year 1. 5% cost-out in year 1.
• Considerable improvements also made to end-customer satisfaction through process improvements.
• Remote coaching set up for Asian Procurement team.

Delivery of the Programme – High Level Illustration of Structure and Content

Activities:

• Establish cross-functional team.
• Engage internal stakeholders.
• Analyse current situation.
• Build initial case for change.

Activities:

• Run 5 internally focused workstreams.
• Analyse processes & skill categories.
• Central team engage supply market.
• Benchmark peer sourcing strategies

Activities:

• Create skill & process level mini-strategies.
• Create macro level breakthrough strategy.
• Combine strategies in integrated approach.
• Obtain sign-off to recommendations.

Activities:

• Brief supply market via RFI process.
• Encourage formation of credible consortia.
• Issue RFP to consortia leads & share key data.
• Shortlist 2 suppliers for final selection.

Activities:

• Select preferred consortia.
• Run detailed due diligence process.
• Establish consortia management team.
• Manage transition & exit existing suppliers.

Programme Objectives:

• To deliver £38m savings in 2008-09 and £100m annual savings during each of the following 5 years.
• To maximise contribution to end customer satisfaction and retention.
• To understand costs & drivers of supply base and shift them to a sustainable lower cost and higher quality.
• To optimise and simplify the end-end process impacting contractor costs including work allocation.
• To identify risks and actively assign responsibility to the most appropriate party.
• To implement the most advantageous ways of contracting with the supply base.