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Situation
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The profits of QP Group’s international client, a large multi-national telecom
provider, were under intense pressure. As a result of deregulation in the
industry, competitors were deploying newer technologies and challenging
traditional regulatory pricing models. To continue operating in this
challenging environment, our client needed to transform itself into an
entrepreneurial, profit-driven enterprise.
QP Group’s client wanted to impact savings by:
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Effectively managing supplier relationships
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Adopting a clearly defined category management process for all of its
procurement professionals
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Reducing operating expenses
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Optimising logistical operations
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Reducing head count to the proper size for its business
The overall spend, approximately $500 million, was fragmented across common
suppliers in many cases and minimally leveraged across the region.
Contributing to our client’s challenge was the fact that 40% of the employees
in procurement roles were not formally part of the supply chain organisation;
they had little training in purchasing or category management skills. These
individuals controlled 70% of the company’s spend.
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Solution
With the support of QP Group the client launched an initiative spanning 16
countries across Central America and the Caribbean. QP Group provided the
tools, project management and coaching that enabled our client’s
cross-functional, cross-national teams to develop value drivers that could
catalyse change. These teams also developed business requirements that would
provide the framework for our client’s new organisational design.
Jointly, we established an agreed set of value drivers for both the initiative
and the proposed organisational structure. The value drivers were sustained
cost reduction, rigorous category management, regional integration, lower
supply chain operating expenses, increased purchasing scope, rapid
implementation, management by facts and data, increased service levels, reduced
inventory and improved quality.
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Benefits
Our client’s transformation was sustainable, delivering both tangible and
non-tangible benefits across the entire company and throughout their new,
world-class procurement organisation. The benefits included:
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Hard savings of $80 million (16%) within two years in reduced operating costs
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Improved service levels and customer focus across the organisation
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Eliminating redundant approval steps
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Reducing time and effort spent expediting orders
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A virtual, centralised organisation attuned to industry dynamics
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Reduced cycle times
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Upgraded employees’ skill sets and tools
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Identified opportunities for additional savings and continuous improvement
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