Transformational Sourcing

Background

This telecoms provider had a fixed capital budget for building and maintaining its network, although capex practices meant that end-customer demand was driving budget utilisation. Combined with external analyst perception of weak capital control, constant pressure was being exerted on the business to achieve more with the same budget.

Challenge

• Segment the spend into skill categories and also key business processes, so that improvements could be made in sourcing and also business processes.
• Build a cross-functional team of technical and sourcing people from central and regional teams that were not used to working collaboratively.
• Create and implement a 1-3-5 year strategy that delivered 20%+ cost reduction from the 7,000 external and internal resources in scope.
• Lead a client team to build the breakthrough strategy required and implement it within a six month timeframe in order to deliver in-year savings.

FP Approach

• Phase 1: Establish a cross-functional team to analyse the current situation, build the initial case for change and engage all internal stakeholders.
• Phase 2: Run 5 internally focused workstreams that gathered data on skill categories and business processes. Run a central team externally focused on engaging the supply market and benchmarking peer group sourcing strategies.
• Phase 3: Create mini-strategies at the skill and process level.  Create a macro- level breakthrough strategy combining all findings into a fully aligned approach.
• Phase 4: Brief the supply market via an RFI process and encourage the formation of credible consortia. Issue an RFP to consortia leads and share key data. Shortlist two suppliers for final selection.
• Phase 5: Select preferred consortia and run detailed due diligence process. Establish new consortia partner management team. Manage transition to consortia and exit of existing suppliers.

Benefits Delivered

More than 200 implementable opportunities were generated during Phase 2, including £11m of quick wins creating an immediate 5:1 ROI. The macro strategy delivered 22% cost reductions over three years on a £750m annual spend, with 14% cost out in year 1.  Considerable improvements were also made in end-customer satisfaction due to the process improvements executed.