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Situation
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- Global insurance company
- Heavy use of local contractors
- 20,000 different suppliers
- Inconsistent service levels
- No system to segregate claims
- Team had little training in procurement
QP Group’s client was a global service company with general consumer and business-to-business clients. QP Group was engaged to identify opportunities for improving procurement capability across the organisation in the buildings supply chain.
No criteria were in place for the selection of contractors to respond to insurance claims. This practice had led to over 20,000 different firms being used throughout one country. Not only was this difficult to manage in terms of cost effectiveness and coordination, but also in the delivery of consistent service levels.
Our client had also put in place a national contract with a preferred supplier. This, however, had few performance and delivery benchmarks and was seen as ineffective by both parties.
Systems were inadequate and could not deliver the appropriate information to help manage the business. The claims team had received little professional training or education in procurement techniques and good practice.
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Solution
- Identified gaps in skills and knowledge
- Created training and education programme
- Segregated categories into sections
- Used sourcing techniques and competitive tendering
- Defined concepts so could monitor quality
QP Group worked with the client’s team to identify gaps in skills and knowledge that were then filled by training and recruitment.
Work was undertaken to segregate the existing large categories into workable sections, allowing data to be better manipulated and presented. Sourcing techniques and competitive tendering were also introduced in the new sub categories to improve cost-effectiveness.
We worked with the preferred supplier to tighten up the contract and implement procedures to create a more effective working relationship on both sides. The key concepts of “quality” “service” and “performance” were defined clearly, enabling benchmarking to monitor standards of delivery.
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Benefits
- Double-digit £million savings after five months
- Long-term strategic vision
- New cross-functional team
- Estimated final savings of triple-digit £million
QP Group achieved a number of “quick wins” after five months, resulting in double-digit £million of annualised cost savings and improved service and quality standards.
A long term strategic vision was developed to introduce best practice procurement into the organisation.
By implementing the longer-term strategic plan, identified savings were triple-digit £million.
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