Strategic Sourcing

The client.

A large professional services firm.

The business issue.

This $10 billion multi-disciplinary, professional services firm with more than 80,000 employees worldwide focused on growing its top line revenues. The firm realized that it could grow more profitably if it could control its operating costs. In addition, the firm recently had spun off its legacy consulting practices, requiring the development of the purchasing practices and contracts specific to the remaining businesses.

The firm needed to achieve significant cost savings in a highly decentralized environment characterized by local buying decisions, fragmented cost-containment efforts and a lack of data.

In particular, the firm sought to reduce costs in four key spend areas – travel, telecommunications, IT and office supplies and equipment – areas that accounted for more than $500 million annually

The solution.

A Strategic Sourcing team assisted the firm by analyzing more than $1 billion in purchases, thousands of suppliers and disparate systems and processes. This project included:

• Conducting a strategic sourcing initiative that included price reductions, policy changes, and demand management initiatives:
• Collecting and assembling current spend data from internal and external sources, and establishing a current spend baseline by area for the first time.
• Gathering requirements by operating entity and developing and negotiating total cost RFPs to leverage the worldwide volume of:
• Travel – implementing net fares for airlines, established preferred hotels and car rental companies.
• Telecommunications – establishing single source carriers for local, long distance, cell phone, audio conferencing, etc.
• Office Supplies – establishing single sources for supplies and paper.
• Performing online reverse auctions, including a pan-European paper event.
• Executing demand-management savings initiatives through improved policy communication and monitoring. Examples included:
• Building an e-mail reporting tool that notified travelers when a lower cost travel option was available and kept a record of lost savings.
• Converting high volume cellular users to bundled minute plans utilizing threshold levels and eliminating pager usage.
• Lowering server administration and maintenance costs by capping e-mail mailbox memory capacity.
• Placing voice messaging traffic on a lower cost delivery medium.
• Reducing purchases of non-discounted office supplies through the use and monitoring of a standard catalog.
• Developing a future procurement structure by identifying and documenting the current state, performing “Best Practice” benchmarking and constructing the “to be” vision:
• Designing and implementing a communication campaign to assist in sustaining and maximizing the captured savings on a world-wide basis.

The results.

This approach created a new procurement function that enabled the company to generate savings of $50 million annually in targeted areas. In addition, it provided mechanisms for tracking these key spend areas on an ongoing basis.

Examples of the company's savings include: