An Indian subsidiary of a global industrial manufacturing firm drastically reduced its MRO spend through an integrated solution.
Strategic Sourcing in Travel Management
A mid-sized global software product company significantly improved its competitiveness and agility through procurement transformation journey.
Overview
Company did not have a dedicated procurement function prior to this intervention and all purchases & vendor management was handled by individual business units. This led to internal inefficiencies and leakages.
Challenges
- Lack of a robust spend and supplier management process.
- Highly fragmented supply base due to lack of policy and inefficient controls.
Solutions
A roadmap was created with strategic sourcing & category management framework to develop long term efficiency and competitiveness.
Key milestones included –
Year 1
- Global Procurement team setup in India and Procurement Policy rolled out.
- Detailed Spend Analysis conducted, and 1st wave strategic sourcing executed.
Year 2
- 2nd wave strategic sourcing projects executed. Sourcing process moves to a steady state.
- Policy compliance focus initiated with stakeholder alignment & communications.
Year 3
- Operational excellence focus initiated, and management reporting implemented.
- Category management framework initiated to increase spend under management.
Year 4
- Operational excellence achieved (ATF, PO lead time, P card etc.).
- Managed spend reached over 90%. Contract management rigor implemented.
- Cross functional project on P2P process efficiency successfully completed.
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Results
- From “No procurement group” to a robust Global Strategic Sourcing Process.
- Global sourcing & procurement managed from India center. Over 90% spend influenced.
- High level of operational excellence, cost savings, C-SAT and policy compliance.
- High global stakeholder engagement – Trusted Advisor.
Key data points over 4 years journey (FY2017 to FY2020) –
- Over $18M cost out through strategic sourcing projects.
- Near 25 days improvement in Weighted Average Payment Terms (WAPT).
- Late POs down from near 40% to under 2%.
- PR-PO lead time improved – from 55% to over 90% POs within 2 days.
- Internal C-SAT improved by over 25%.
Procurement transformation, a 3-5 year roadmap to elevate the value of procurement, if done right, can deliver significant benefits to your organization
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