Baking efficiencies into category management

CASE STUDY

BAKING EFFICIENCIES INTO CATEGORY MANAGEMENT

Abstract

When a procurement function lacks a coherent strategy, standardized processes, and modern technology — especially in the highly cost-sensitive food industry — it often needs to be completely re-engineered. That’s what a food services organization did with the help of Infosys Portland, yielding a total of $6 Mn via cross-functional productivity gains and up to 40% reduction in the procurement operating budget.

External Document © 2021 Infosys Portland

The client

Infosys Portland’s client is a group purchasing organization in the food services industry and one of the largest in North America. The company leverages its large volume of purchases for group members to negotiate economies of scale and deliver pricing efficiencies.



An efficiency-challenged function

The client had limited understanding of procurement technology while also lacking an overarching procurement strategy. Thus, sourcing and category teams worked in silos, and procurement activities independent of any technological advancements were being performed

with a high degree of manual effort. Further, with the reporting of processes and outcomes being done through a proprietary ERP, the client faced other challenges such as a clunky data environment and inadequate visibility.

Seeking to increase the cost-effectiveness and efficiency of the function, the organization brought Infosys Portland on board as a partner to help improve the procurement processes.

Current Centralized Approach

Tribal & scattered knowledge

Recommendations to Achieve Full Future State Full Future Retained Knowledge

Knowledge loss

Structure & organize

Tech to codify

knowledge

Knowledge connected to people

Category & Market Insights

Policies, Templates & Procedures

Context / History Across Members &

Sectors

Training & Onboarding

Ph1 Near-term Initiatives

Goal: Lay the building blocks and team discipline for knowledge management

Ph2

Goal: Expand into a full procurement knowledge center to support the future Operating Model

Longer-term Initiatives

Figure 1: current state and desired future state


Diagnosing for a cure

Infosys Portland deployed a team of procurement transformation specialists who undertook a functional diagnostic of the clients processes over 8-10 weeks.

The diagnosis revealed several reasons behind the lack of effectiveness of the function. Chief among them were the duplication of roles and responsibilities driven by non-standardization of processes, and a serious lack of complete and structured data which led to limited collaboration, complicated touchpoints, and poor knowledge sharing. The situation was further exacerbated by the client facing a ~20% headcount reduction due to COVID-related reasons.

The diagnostic not only brought out the organization’s low levels of procurement maturity but also highlighted the dire need for process reengineering.



Re-engineering across three areas

To address the challenges, the Infosys Portland team divided the client’s procurement activities into three workstreams and worked on transforming them as detailed below:

• Process: This workstream involved identifying 34 processes/ activities that were transactional in nature. For 14 of these processes, the team realigned roles and responsibilities to ensure that operational activities were allocated to junior resources so that strategic initiatives could be directed to senior resources.

• Organization: The transformation specialists helped the client with redesigning the core stakeholders and functional teams; and with defining a functional strategy as well as related goals and metrics. The team then benchmarked the new organizational structure against a best-in-class model and adjusted for foodservice industry complexities (e.g., type of price change and frequency, local vs national supply base, suppliers per subcategory).

• Technology: The team recommended the incorporation of data analytics and AI technologies to strengthen the capabilities of the procurement function and for better insights. However, since the client was apprehensive and conservative on incorporating any new technologies, Infosys Portland avoided the addition of any complexities and instead focused on leveraging the existing technology base. As an outcome of this workstream, the team created a procurement ecosystem for the client and optimized its future state roadmap.



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Processes

Leaders and Strategic team members will focus on more strategic processes / activities in the future state

Operational process and activities will be performed by junior resources

Strategic processes not consistently performed in the

current state

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Processesperformed Current State Future State Future State Full Automation

Figure 2: Operating Model Recommendation – Segregation of Duties Based on Resource Level


Enjoying the desserts of re-engineering

Infosys Portland’s domain expertise and hands on experience helped it build fully optimized procurement processes for the client. The reengineered function not only yielded nearly 53,000 hours in eliminated tasks but also improved business outcomes as well as internal SLAs. The client also had the potential to secure additional 40% in procurement

budget reduction amounting to ~$6M as they follow Infosys Portland’s four-step organizational structure evolution to optimize resources across the function.

More importantly, the technology implementation roadmap developed by the team outlined several near-term

solutions to guide the client towards its desired future state across all workstreams. The roadmap was geared towards enabling both the newly developed organization structure as well as the future states of the processes. That’s what is called the icing on a well-baked cake.

© 2021 Infosys Limited, Bengaluru, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

About Infosys PortlandInfosys Portland is a subsidiary of Infosys BPM Ltd., a part of Infosys Ltd. Its mission is to improve the e�ciency and e�ectiveness of its clients’ procurement and supply chain activities. We achieve this by providing thought leadership, specialist subject matter expertise, a global delivery model, and best-in-class technology solutions. By increasing the value delivered and improving the of procurement and supply chain operations, our clients are able to achieve more for less.

For more information, contact [email protected] www.infosysportland.com

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Baking efficiencies into category management