Procurement transformation and quick win savings
By Simon Brown |
A medium-sized insurance company, with a large number of insurance offices across the UK, was faced with increasing competition from online insurance brokers who were able to offer their products at a much lower cost due to not having “bricks and mortar” footprint of insurance offices.
The procurement team of 15 individuals had limited spend responsibility for Facilities only. Most spend areas were managed locally on a fragmented decentralised basis, without procurement involvement. There were inconsistent approaches to procurement which greatly sub-optimised the ability to be more cost efficient.
Our client wanted to drive a procurement transformation programme and reduce costs by using category management as a key enabler.
Delivering procurement transformation.
Initially, Future Purchasing carried out an opportunity analysis to identify potential savings and recommended a procurement structure to deliver the benefits. Stakeholder interviews were undertaken and opportunity areas were validated.
Based on the findings, FP helped to re-structure the procurement organisation and to recruit a number of new staff for key positions within the team. A new procurement policy and contract register was set up together with a category management and benefits tracking process.
We established a programme governance structure with access to the senior executive team and developed cross-functional category strategies that were reviewed.
Following our work, the new procurement team became involved in all areas of external spend. Our initial programme identified £9.7m savings for delivery (8%), including:
- savings on print and mailings worth £2.5m (23%)
- savings in buying external credit data through structured contract negotiation (40%)
- cost saving in IT equipment spend through RFP process (12%)
- saving in travel and accommodation by implementing a new travel policy (8%).
We created a new procurement policy, procedures, benefits tracking process, contracts register and overarching Procurement strategy.
We also introduced a new category management way of working that involved developing category strategies in a more cross-functional way with key stakeholders. And we coached individual members of the procurement team in how to deliver the savings opportunities.
Our supplier management approach combines excellent tools and techniques across the full range of activity, from segmentation, through performance measurement and improvement and through to relationship strategy development.
Excellence in Category Management gives multipliers of value delivery compared to less effective programs. Our approach, delivers a high performing team and process which provides sustainable value over years rather than months.
About Simon Brown
30 years procurement experience in line management and
Previous employment: British Aerospace, British Airways, QP Group
Education: MBA, London Business School. BA (Hons) Business Studies.