Global Procurement Representative Case Studies 8M EUR (10%+ savings) through strategic sourcing...

Global Procurement

Representative Case Studies

Table of Contents

Page Client / Industry Region Delivered Project Type

3 Best Buy North America Source-to-Pay (S2P) Transformation

5 Aetna North America Strategic Sourcing

7 Kraft Foods North America BPO/Strategic Sourcing/Category

Management

9 Oil & Gas North America Strategic Sourcing

11 Energy France Purchasing Excellence

13 Manufacturing France Global Procurement Solution

15 Insurance France Procurement Optimization

17 Aerospace France Design-to-Cost Integration

19 Building Materials France Strategic Sourcing

21 Financial Services France Strategic Procurement Transformation

23 SCA Sweden Savings Control Tower

25 Government Sweden Spend Analysis & Category Management

Strategy

Identified Savings of $161 to $254M through Source-to-Pay (S2P) Transformation

Best Buy is in the middle of a

transformation – business, culture,

technologies, partnerships. They

are looking for a transformation

roadmap to enable Procurement to

achieve the next level of

performance.

Client Issues Compliance

Leakage is occurring throughout the S2P

function – procurement channels, preferred

suppliers and contract management

Procurement policies and procedures are

unclear and inconsistent

Process

Procurement processes and policies are

not consistently applied and/or not category

specific

Technology

Complicated IT landscape with ~70

procurement systems

Various business units, functions and

geographies have custom, home-grown S2P

systems

Capgemini Consulting Solution

We partnered with Best Buy to complete the

“Discovery Phase” of its Source-to-Pay

(S2P) transformation program centered on:

Transforming the procurement organization

and operating model

Developing clearly defined and consistent

processes incorporating LEAN techniques

and tools

Implement leading class S2P and T&E

technology and processes

Results / Value Delivered

1. End-to-End Compliance: Reduced leakage of realizing savings by purchasing through the

correct procurement channels, from the right vendor, at the contracted price and paying on the

agreed upon terms; effective contract life cycle management

2. Process Standardization: Standardized S2P and T&E processes across the enterprise

provides considerable, sustainable value

3. IT Rationalization: Reduced the size of the overall IT Landscape will reduce maintenance,

license, infrastructure and support related fees

Compliance Process IT

Reduction of savings leakage through non-compliance

Increase electronic invoices

ePayables Pay channel optimization

System decommissioning Support reduction

$96 – 170 M $57 – 73 M $8 – 11 M

$161 - $254 M Total Savings Identified

Our Differentiators At Capgemini Consulting, we understand that

people are our greatest differentiator. We have

consistently delivered superior results to our

clients because our global procurement

transformation group is comprised of experience

and knowledgeable practitioners who know how

to provide key insights to problems and unlock

previously untapped value in the organization.

Global practice with thousands of practitioners

in over 40 countries possessing both deep

industry and consulting experience

Robust, client tested methodologies and tools

that can accelerate the S2P solution evaluation

and selection process

Strong partnerships with industry leading S2P

solution providers

Global research and delivery capabilities

Experienced team – from strategy to solution

deployment & support

Unique insights beyond just features and

functionality

Thought Leadership Capgemini Consulting offers unique thoughts and

insights about procurement. We share our

research and expertise through publications like

our CPO Survey and SRM Study. You can find

out more of our views on our regularly updated

Procurement Blog.

www.capgemini-

consulting.com/blog/procurement-

transformation-blog

Capgemini Consulting uses its

experience and knowledge to

provide key insights for clients

throughout all industries

Capgemini Consulting is the strategy and transformation

consulting brand of Capgemini Group. The information

contained in this document is proprietary.

© 2013 Capgemini. All rights reserved.

Contacts

Adrian Penka

[email protected]

404.285.9907

@A_Pen_ka

Matthew Shull

[email protected]

214.577.3216

@Matthew_Shull

Capgemini Consulting is the global strategy and

transformation consulting organization of the

Capgemini Group, specializing in advising and

supporting enterprises in significant

transformation, from innovative strategy to

execution.

Find out more at:

www.capgemini-consulting.com

Learn More Capgemini Consulting offers existing and

potential clients the opportunity to discuss these

and other projects designed to deliver sustained

value.

We can also provide a view of how to drive

greater value with Digital Transformation

strategies in Procurement.

http://www.capgemini-consulting.com/blog/procurement-transformation-blog







Identification of 8% aggregate savings across 15 categories and negotiated a

22% fee reduction from a sourcing event

Aetna, a leading US-based health

insurance payment company, had

embarked on an enterprise-wide

challenge to increase efficiencies

and improve care while lowering

total costs in preparation of the

passage of the United States health

care reform legislation


Conducted a spend analysis and prioritized

categories by opportunity over a 12-week period

Developed 15 category knowledge packs

representing spend of$760M which included:

Spend Data Analysis

Analysis and benchmarking of the

external supply market

Identified and prioritized savings

opportunities

Developed recommended strategy and

execution plan

Executed a targeted sourcing event for

accelerated sourcing

Spearheaded a business process reengineering

initiative and shared knowledge on leading practices

Trained Procurement personnel on sourcing

methodology

Results / Value Delivered Identified up to 8% in aggregate savings across 15 categories

Negotiated a 22% fee reduction from the accelerated sourcing event

Initiated and led a business process reengineering effor that enabled Aetna to increase

supplier competition in a key spend area and is expected to produce long term benefits

Client Issues Aetna ‘s procurement organization was tasked with

achieving significant cost savings in a short

timeframe and engaged Capgemini Consulting to

conduct a sourcing opportunity assessment to

identify savings opportunities in its supply base and

help achieve their savings objectives
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Adrian Penka

[email protected]

404.285.9907

@A_Pen_ka

Matthew Shull

[email protected]

214.577.3216

@Matthew_Shull






execution.

Find out more at:





value.











Assisted Kraft Foods in realizing significant savings (~$25M/yr) through Indirect

Procurement Outsourcing and a large portfolio of SCM initiatives

Capgemini Consulting engaged in

a procurement excellence program

focused on savings/cost reduction

programs to increase the bottom

line


Outsource management of Indirect Spend for

non-core sourcing activities

“Re-Sourcing” major commodities following an

extensive spend analysis to identify opportunities

Reduced complexity in all areas of Supply Chain

Sourcing and Contracting

Sourcing and day-to-day category management of

68 commodities in 13 different categories

Operating Model transformation through the

creation of Category Councils and provided

recommendations to the BPO organization on

effective future operating model

Results / Value Delivered Contracted over $25M in annual cost savings during the first year through the strategic

sourcing initiative

Helped identify sourcing improvements across commodity segments

Drastically reduced overhead costs due to more simplified and unified vendor management

approach

Project led to an additional $10M in savings from rationalization during merger integration

activities

Client Issues Kraft had been paying above market rates for

goods and services due to lack of ability to

effectively use leverage in negotiations.

They were also maintaining an increased cost of

managing a large number of regional, national and

international vendors.

Kraft was missing opportunities to share leading

practices across the several business units.

Company leadership tasked the Supply Chain

group to significantly reduce costs across the

organization specifically for year on year savings

WAVE I

Category

Spend

(000's)

Savings

Potential

(000's)

Sourcing

Approach

Savings

Opportunity

Rating

Organizational

Alignment

Rating

IT Infrastructure & Services 35,000 5,600 SS/D 10 5

Office Supplies, Services & Equipment 7,500 1,360 C/SS/Q 9 8

Travel 59,000 4,130 C/SS/D 10 3

HR Services 98,000 9,650 C/SS/D 10 4

Other Business Services 5,000 550 C 9 5

Manufacturing Services 139,159 28,317 C/SS/D 10 9

Parts & Supplies 32,870 5,662 C/D 10 9

Auxiliary 20,000 3,400 Q 10 3

Construction 250,000 47,500 SS/D 10 5

Distribution / material handling equipment 28,700 4,018 SS/D 10 5

110,188$

Core Categories

Total Wave I Savings Opportunity

The team (is) delivering what was expected in terms of

new ideas and methods. The group has learned a lot from

team members. It is a pleasure working with the team.”

- Project Sponsor
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Adrian Penka

[email protected]

404.285.9907

@A_Pen_ka

Matthew Shull

[email protected]

214.577.3216

@Matthew_Shull






execution.

Find out more at:





value.











Secured 8M EUR (10%+ savings) through strategic sourcing initiatives in the

indirect categories

Capgemini Consulting engaged in a

strategic sourcing engagement in

order to secure significant savings

in their indirect purchasing

categories


Set up and implement a systematic strategic

sourcing approach of the categories through

Spend analysis

Category strategy

Preparation and launch of RFP

Negotiation strategy with suppliers,

including execution of negotiation

Set up frame agreements

Roll out and implementation management

Provided client with methodology support and

coaching to professionalize purchasing activities

through

Category Toolbox

Negotiation Kit including training

Support to spend management activities

Project Management

Results / Value Delivered Secured 8MEur, resulting in more than 10% savings on spend under management

Defined and validated category strategies within the corporate purchasing organization

Utilized buyers for operational involvement to support the implementation of the categories

Trained and handed over category knowledge packs for future negotiations and further

savings within the indirect procurement categories

Client Issues Client needed immediate reduction of cost

through strategic sourcing initiatives

Client had aggressive savings targets in year

over year savings

Client wanted to enhance their purchasing

organization to operate more efficiently specifically

in their indirect categories

Client wanted to increase the legitimacy of a

group purchasing organization within the group

BUs

A Global Oil & Gas

Leader

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solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Adrian Penka

[email protected]

404.285.9907

@A_Pen_ka

Matthew Shull

[email protected]

214.577.3216

@Matthew_Shull






execution.

Find out more at:





value.












lean approach focused on time

savings in purchasing process to

increase buyers high added values

activities

Client Issues Simplify the purchasing process while increasing

the added value ratio on buyers activities

Reduce the processing time by 20% when time

piloting is not in corporate culture

Capgemini Consulting Solution Lean / Six Sigma – DMAIC methodology:

Cartography of different process types

Statistical analysis of 6400 projects through

purchasing information system, statistical

treatment of 250 notes of market analysis

Diagnostic of current situation and identification of

potential levers through: 24 interviews, 450

questionnaires, 6 workshops (review of

processes, RACI, added value ratio calculation,

issues / accessibility)

Result analysis and synthesis to develop a

recommendation plan

Gantt design for transformation phase

Transformation roadmap for short, medium and

long term with operational action plan for the

short-term recommendations

Results / Value Delivered An opportunity to reduce of 30% the average time spend on purchasing process

Repositioned 45 FTEs on tasks with high added value: procurement strategies

development, negotiation, monitoring and analysis of market development (trends and

prices) experience feedback…

Identified time savings of 30% on current purchasing process to reallocate it to

high added values activities

A Global Leader

in Energy





transformation group is comprised of experienced











solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Emmanuel Gavache

[email protected]

+33 6 07 16 98 34






execution.

Find out more at:





value.












strategic worldwide program

focused on improving client

competitiveness and reactivity

Client Issues To increase its competitiveness and reactivity, the

client’s board decided to launch a strategic global

program named “Enterprise Steering Tool”, a multi-

year, multi-region program mobilizing hundreds of

resources worldwide, followed at the top level of the

company on a weekly basis.

This program has three main objectives :

1. Better serve clients through an upgrade of

processes for the downstream domain

2. Align globally all processes on a core optimized

model, based on an Oracle solution

3. Improve the upstream supply chain by

implementing a PLM, deploying global

warehousing and planning solution.

Capgemini Consulting Solution Capgemini Consulting supported all parts of this

program including the program steering:

On the downstream component, we worked on

defining the future state and drove the global

architecture of the overall solution

On the Oracle solution built, we defined the

methodology and assisted the program PMO in

critical phases and activities

On the upstream supply chain, we defined the core

principles of the solution and were responsible of the

integration of the different sub-projects (especially

integration of external suppliers…)

At the program level, we took the responsibility to

assist the program director in the program steering

(PMO)

Results / Value Delivered This program is still on-going and as of now on time and on target. Feedback from CEO after

last Go Live in China is that this program ‘’constitutes a perfect benchmark of how a

project should be managed’’

Scope and level of change regarding current practices makes this program truly unique for

the client in term of size and level of ambition and rarely seen in other environments.

Assisted the client in increasing its competitiveness and reactivity towards its

clients thanks to a strategic steering tool including P2P

A Global Manufacturer
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Emmanuel Gavache

[email protected]

+33 6 07 16 98 34






execution.

Find out more at:





value.











More than 200 M€ of spend covered by the solution

Capgemini helped the client to

manage expenditure

commitment and to optimize

procurement management

Client Issues Client needed to:

Improve spend control within the group

Standardize procurement practices (workflows, procurement,

purchasing, budget construction, invoices processing…)

Improve flows traceability (invoices …)

Increase spend coverage visibility throughout all departments

Monitor expenditure commitment


A 4-steps project :

Redefine the target and analyze the tool solutions with

regards to the business priorities and budget constraints

Build the process of the targeted organizations and

analyze business impacts

Specify the targeted solution and prepare its deployment:

integrator response to the business need

Targeted solution deployment: change management

(training, communication)

Main project streams (general expenses perimeter):

Procurement classification redefinition

Procurement and financial processes design (including

invoices dematerialization)

Client support in related arbitration


More than € 200M of spend covered by the solution

Consolidated spend visibility

Flows and processes optimization

Savings due to catalogs use

Better cooperation between Procurement, Purchasing and

Internal Client

A Global Leader

in Insurance
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Emmanuel Gavache

[email protected]

+33 6 07 16 98 34






execution.

Find out more at:





value.











Integration of a structured Design to Cost (DtC) approach in the whole program

cycle

The group launched an initiative to

enhance Design to Cost best

practices

Client Issues Through its efficiency plan on Technical

Research Development and Industrialization,

the client has three main objectives :

Support companies in their programs

through the distribution of DtC

methodological elements

Provide support to companies to improve

their maturity on DtC (matrix / action plan

/ toolbox ...)

Build a training plan on DtC (from

awareness on basics till experts modules)

Implement DtC projects within the group


Work focused on three main streams:

DtC methodology

Training session

Support the DtC process roll out

Workshops gathering several Safran

function representatives (engineering,

purchasing, program, finance, …) to build

key elements of the approach

Monitoring of DtC methodology and tools

implementation

DtC single point of contact network set up


Strengthening the validation of program development milestones with criteria related to

cost (DtC guidelines)

Enrichment of procedures with DtC Group actions (7 procedures formalized)

Formalization of training modules (5 training modules, more than 100 trainees)

Construction of an appraisal matrix on companies DtC maturity with an associated

action plan (toolbox)

Key success factors

Involvement of participants from each company in order to integrate the specificities of

each business , and representatives of all function involved in the DtC approach

Enrichment of group development procedures (prescriptive) with milestone including

specific to cost criteria

Leverage on existing bodies :

Corporate University (for training)

Toolbox to disseminate elements approach

A Global Leader

in Aerospace
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Jean-Pierre Pellé

[email protected]

+33 6 08 28 66 33






execution.

Find out more at:





value.











Strategic sourcing initiatives for 12 categories


successful methodology to help the

client to develop purchasing

strategies for 12 categories

Client Issues Launched a global program in 2012 in

order to increase its operating income by

2014

One of the main objectives of the

program was procurement costs

optimization in each country


A first step of “Flash” diagnosis enabled the client

to identify and prioritize purchasing categories to

be addressed according savings potential

The second step aimed at analyzing each

category in detail to identify - with the categories

contributors support (purchasing, internal client, ..)

- the suitable action plan to put in place to achieve

the savings objectives

A benefit tracking tool has been implemented to

follow savings


Savings objectives identified with associated action plan for 12 purchasing categories

The project contributed to the skill improvement within the purchasing team, especially

thanks to the systematical investigation of all purchasing levers: buy less, buy better, buy

cheaper.

The collaboration between the purchasing team and the internal clients was enhanced

through the common definition – and then implementation- of the action plans

A 3 steps methodology

Detailed diagnosis for prioritized purchasing categories

Action plans deployment for each category

“Flash” Diagnosis

Top down analysis / Capgemini Consulting expertise

Holcim France purchasing practices analysis

Savings estimation

Bottom up / Focus interviews

Focus interviews with different actors to identify main purchasing levers: top management, purchasing officers and internal clients

Buy cheaper

Buy better Buy less

The detailed diagnosis relies on the 3 following levers :

Roadmap 3 …

Roadmap 2

Roadmap 1

Identification of the prioritized categories

A Global Leader

in Building Materials
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Ludovic David

[email protected]

+33 6 76 70 32 76






execution.

Find out more at:





value.











Empower the procurement organization through uniform processes

implementation, governance strengthening and sourcing methodology definition

Capgemini Consulting was involved

in the transformation of the client’s

Procurement Function in order to

improve its performance and

control risks

Client Issues

To ensure maximum effectiveness, the Procurement function needed to

gain acceptance from the branches and the business units of the group.

To achieve this, a collaborative purchasing culture was essential, even

if in some aspects this went against the more aggressive approach

often used in industry

As large banks count among the most complex types of organization,

properly taking into consideration these organisational issues was a key

success factor for the Procurement function

Chief Procurement Officer (CPO) mandated Capgemini Consulting with

the task of strengthening the central procurement organization, and

standardizing the processes, practices and rules of governance for

procurement throughout the Group


To fulfill its mandate, Capgemini Consulting helped the client to:

Develop a three-year vision for the Group Procurement function, based

on seven core pillars: Vision, Strategy, Core Competencies,

Organizational Structure, Processes, Tools, and Style.

Define Procurement Norms and Standards for all purchases performed

within the group

Define a procedure for managing supplier risk

Design a procurement dashboard and a planning and monitoring

activity

Construct and implement sourcing strategies for key commodities

Assess Procurement maturity of subsidiaries and propose an action

plan to improve local performance


The Procurement function has gained recognition as a major contributor

to operational effectiveness

It has successfully managed to build strong links with business units and

has adapted its organization to the major stakes of the bank:

External cost optimization

Risk assessment and control

Transactional conformity

Moreover, the client is now able to coordinate procurement actions and

policies across all subsidiaries of the Group.

Example: supplier risk definition

A European Leader in

Global Banking and

Financial Services
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Philippe Rémy

[email protected]

+33 6 31 21 93 67

Pascal Haubois

[email protected]

+33 6 85 29 70 43






execution.

Find out more at:





value.











mailto:[email protected]

mailto:[email protected]

Implementation of a Savings Control Tower provided full control of a complex

global program and a savings realization exceeding the target

SCA had defined an ambitious

efficiency program with the goal to

realize ~300 MEUR in cost

reductions . Global Hygiene

Sourcing was expected to deliver

about half of the savings by

reducing costs for procured

materials and services

Client Issues

A diagnostics phase within procurement had

been completed, resulting in a detailed spend

cube, opportunity assessment, and +380 savings

initiatives identified and documented with

assigned owners

However, it was lacking a mechanism to govern

the savings program, handling the level of

complexity and securing target fulfillment


Establishing a "Savings Control Tower"

comprising the following components:

A Program Office Organization

Standard PMO processes and governance

procedures: Savings tracking, Risk log, Action log,

Change log, Status meetings, etc.

An IT-tool , based on SharePoint technology and

configured to customer needs:

A common savings initiative charter

Captured all savings initiatives in the

charter

Built standard views and reports

100% tracking and updates done in tool

Relentless, action oriented approach in frequent

meetings with the sourcing initiative owners,

controllers and management across functions

Frequent reporting of program- and savings

delivery progress to senior management, focusing

on value and actions


Full control of a large and complex program with global scope

Complete, accurate view of consolidated savings delivery vs. the savings goal at any point

in time

Consolidated, high-level "Dashboard" view of Savings- and program status

Detailed view of the status of every single savings initiative

A new way-of-working with governance of sourcing projects implemented in the line

organization

With the current rate of savings realization the program will exceed the savings target

Incorporated and supported by technology

Governing

Organization

Processes Technology
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Michael Skordby

[email protected]

+46853684021

Anders Lundquist

[email protected]

+46853683007






execution.

Find out more at:





value.











Spend analysis and strategy, group forums, and instructions for procurement

were developed for procurement resulting in 150 MSEK in secured savings

There is Pressure from the

government to lower costs without

lowering capabilities in the middle

of a SAP implementation to

establish better financial control

Client Issues

The central procurement organisation,

established early 2000, were reactive to

business demand which resulted in many

small, inefficient ,and overlapping

contracts with limited savings


Delivered a spend analysis, a channel

strategy ,and 25 category strategies

Established/developed a group forum,

instruction, and scorecard for

procurement

worked in joint teams with the client

organization to ensure successful project

delivery and knowledge transfer.

Delivered with a diverse team, including

experienced professionals within

procurement, operating model and

performance management.


As of 2013, the project has delivered 150 MSEK in secured savings.

Internal resources to drive and deliver category strategies have been recruited, trained and

are fully operational today

Involved client resources have been trained on the methodology and are more skilled

procurement professionals today
















solution providers





functionality






Procurement Blog.

www.capgemini-


transformation-blog









Contacts

Michael Skordby

[email protected]

+46853684021

Anders Lundquist

[email protected]

+46853683007






execution.

Find out more at:





value.











Global Procurement Representative Case Studies 8M EUR (10%+ savings) through strategic sourcing...

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Transcript of Global Procurement Representative Case Studies 8M EUR (10%+ savings) through strategic sourcing...