Procurement Organisation Value / Maturity Assessment
Challenge
After a challenging year during which financials have been impacted by the Covid-19 pandemic, our client launched an ambitious strategic initiative aiming at becoming more efficient, going back to growth and delivering sustainable value to Consumers and Doctors.
Curzon Consulting was instructed to conduct a full Procurement Organisation Review & Spend Opportunity Assessment
Curzon's approach
Curzon conducted a complete review of the procurement function. It included a quantitative part aiming at identifying cost savings opportunities and a qualitative part aiming at assessing the maturity of the organisation and value delivered to the business.
Quantitative Assessment
- Cleaned and categorised spend data
- Provided full spend transparency, baselined spend, volume and unit cost by category, supplier and hospital
- Conducted Category deep dive for each key category, identifying opportunities and sourcing levers
- Identified and quantified savings potential via internal and external benchmarking
- Prioritised source plan with savings targets by spend category
- High level 3-Year business plan
Value/Maturity Assessment
- Assessed procurement organisation against best practices in 8 dimensions.
- Quantitatively and qualitatively assessed the procurement team, conducted time analysis, salary benchmark & reviewed performance
- Business Partnering and perceived value : Interviewed key business stakeholders across all divisions, engaged with all Board Members to collect feedback and clarify expectations
- Assessed procurement influence across all spend areas,
- Defined and costed new (to-be) procurement organisation
Impact
- Identified broken links between Procurement and the Business : Procurement was perceived as a tactical team, good for tactical negotiations, but rarely involved in any strategic discussions.
- As a consequence, procurement was able to influence only a small part of non-strategic spend
- Curzon worked with the Senior Management Team and Key Stakeholder to define Business expectations and open the door to Strategic Procurement.
- Assessed existing Team, identified Gaps and suggested adequate procurement profiles
- Designed new procurement organisation, including sizing and targeted organisation costs
- Review external spend across 20+ categories
- Assessed procurement effort to category management, applied benchmarks and identified opportunities
- Identified substantial cost savings opportunities, leading to multi- £m cost savings
- Defined 3 years implementation plan, leading to more than 80% of the external being addressed.
- Curzon was engaged for the implementation phase of Procurement Transformation
Contact our Procurement service line lead,Stephane Boroncelli, to find out more
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TCO Analysis
Challenge
A sourcing initiative was conducted by the procurement team, leading to the selection of preferred suppliers and the phasing out a major incumbent supplier
Pricing agreement was based on lenses, which represent part of the total ophthalmic spend
Decision was made with no consultation of clinical key stakeholders, leading to low compliance to sourcing decision
In the meantime, as a retaliation, the incumbent supplier substantially increased pricing
Curzon's approach
- Created full spend transparency on Ophthalmic Spends
- Sourcing decision was based on 30% of the total spend only
- Applied TCO analysis
- Identified risks as un-addressed part of the spend led to major price increase, wiping out all benefits of the sourcing initiative
- Defined requirements and specifications on 100% spend
- Conducted additional negotiations with selected suppliers
- Identified and implemented further savings opportunities through pack harmonisation
Impact
- Sped-up implementation and increased Clinical compliance
- Eliminated negative commercial impact and achieved multi £m additional savings
- Achieved operational efficiencies through pack standardisation
Contact our Procurement service line lead,Stephane Boroncelli, to find out more
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Value based Procurement
Challenge
Our client, the largest European manufacturer, was trying to rationalise its product materials contractors. With several billion pounds worth of expenditure and over 300 contractors to manage, the state of the relationship was very tactical between procurement And the supply base. As most of the products were unique, prices were negotiated periodically with little understanding of cost drivers and value for money. At the same time, perceived value of the contractors was based on Business Stakeholders emotional preferences.
Curzon's approach
We launched a major review program aiming at maximising the value received from contractors while optimising prices and achieving cost savings.
We engaged, early on, with all of our client’s Business Units and onboarded them through the transformation journey., We ensured Business Stakeholders were not just kept informed but part of the solution.
Value
- Reviewed and implemented improved SLA’s
- Developed Unique contractor value assessment technique where Quality, level of services, innovation, sustainability where all factored-in a comparative way
- Incentivised and rewarded suppliers bringing innovation and helping with sustainability strategy
Price-wise
- Brought cost transparency through costing formulas
- Implemented advanced negotiation techniques to optimise pricing
- Conducted global contractor market review for all types of materials
- Created competitions in the monopolistic areas
- Went to market in areas dominated by powerful historic contractors
- Proactively collaborated with key suppliers to implement efficiencies & improvements
Impact
As we stayed well beyond the sourcing process we ensured the following benefits materialised.:
- Stakeholders collaboration and procurement seen as key partner to the business
- Multi-million £ Cost savings achieved over 3 years in a row
- Increased of level of services, delivery performance and products quality
- Full support to client’s sustainability objective