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POST CONTRACT MANAGEMENT Unlocking the Potential
Mira Ristovich
Senior Consultant: Group ProcurementCIPS Sothern Africa Pan African Conference
24 - 26 May 2011
Agenda
• As MTN, we…
• Business Growth
• Political risk map
• Procurement Helix
• Sourcing Methodology & Relationship Life Cycle
• L&D Vendor Rationalisation – Background
• Pre-Contract: Planned Achievement Against Project Goals
• Sourcing: Vendor Filter Process
• Contract: From “Purchasing”.........To “Procurement”
• Post Contract Management Relationships
• Savings Realisation Model
• Supplier Positioning for Sourcing Strategy
• Managing Critical Supplier Relationships Model
• Organisational benefits achieved
© 2009 Accenture. All rights reserved. 2
As MTN, we…
• Connect people with family, friends and jobs
• Create jobs, directly in the operations with entrepreneurs who sell
airtime, cleaning services, advertising services, office rentals, security
services – which generates the economic multiplier
• Create a positive atmosphere for other investments into the country
• Pay taxes which enable government to invest back into the communities
with infrastructure development
• Create infrastructure where non exists (in place of rail, roads)
• Inspire the youth
• Invest in the communities in which we operate
© 2009 Accenture. All rights reserved. 3
2000 2005 2010
Operations 5 11 21
Population 68m 344m 552m
Market cap (ZAR bn) 58 (31 March 2000) 103 (31 Dec 2005) 253 (31 Dec 2010)
Revenue (ZAR bn) 6 29 115
EBITDA 2 12 50.5
Subs(m) 2,3 12 141,7
Business Growth
National Player African Player Emerging Market Player
Sourcing Methodology & Relationship Life Cycle
7
Identify
Opportunity
Post
Contract
Management
Contract
ManagementSolution
Definition
Seller’s activities:
Develop offeringAdvertise Create needsConditionSell
Buyer’s activities:
Buyer has needSpecifies need SearchCondition
Negotiate frame
agreements with
key suppliers to
ensure better price
and more
efficiency
Detailed
agreement
Implementation
Initial delivery
Refining
Ongoing delivery
Continuous
improvement
Business development
Extension
Completion
Termination
Sourcing
Methodology
Process
Relationship
Life Cycle
Model
Diagnostic
Phase
Business Case
Development
Approval by
Technical
Committee
Cross Functional
Team approval
CFT defines the
scope RFx issued Evaluation process
(desktop,
presentation,
additional questions,
price review)Short listed vendors
identifiedHigh level plan
L&D Vendor Rationalisation - Background
MTN Group Learning and Development (L&D) aims
to rationalise its learning vendor base to:
• Realise the potential savings opportunity
• Enable and sustain a rationalised learning vendor
base and
• Improve the quality and consistency of learning
delivered
8
Pre-Contract:Planned Achievement Against Project Goals
Goal Planned Result
Rationalise the vendor base In the targeted competency clusters by 25 – 50%
Achieve cost savings Between 7% and 20% in net nominal savings opportunity. MTN’s strategic
objective is to be a least cost operator
Achieve economies of scale Negotiate price, screen the quality and content
Standardisation of vendors per competency cluster
In line with critical skills required
Identify suppliers and rationalise supplier base
Assess suppliers on full set of criteria, including capabilities, offerings, price and quality
Incorporate leading practices of sourcing of Learning Vendors into MTN
Remaining four sourcing steps to be used to realise the savings opportunities
Reduce administrative efforts Standardise learning vendor management processes and improve integration between L&D, Procurement and Finance functions
The business case findings indicate that the rationalisation of L&D vendor management
will lead to costs savings, a reduced vendor base and consolidated programme catalogue
9
Sourcing: Vendor Filter Process
10
Shortlisted vendors from RFP process and
selected priority vendors will proceed to the next
sourcing event (auction/negotiation)
Final vendor selection will be made to align with
the project mandates of vendor rationalisation
and cost savings
Final
Proposal
Minimal Requirements
Value Add
Supplier pool identified via internal
and external research
Screen 3
Screen 2
RFI information provides input to
this processScreen 1
Final
Agreement
MTN
Vendor
External
Vendors Total
No. of
vendors
invited
160 33 193
No. of
vendors
responded
60 17 77
No. of
vendors
shortlisted
26 7 33
No. of
vendors to
be
contracted
15 4 20
• Combination of RFP and RFI issued
• MTN incumbents and external vendors were sent the RFP’s based on their capabilities
Operating Guidelines - MTN
Procurement Programme
• Comparisons will be made based on total cost of
ownership, including cost of switching and qualitative
aspects• Strategies will optimize group scale and align
approaches to match individual business needs• No group company will be worse off in the current
environment than they were pre-strategy• “The Contract” -Once potential suppliers, evaluation
and risk criteria and implementation plans are defined
by the operating companies, all sourcing decisions
are to be honoured.
Contract: From “Purchasing”...To “Procurement”
Contract Prioritisation
and Assessment
Contract Strategy
Development
Contract Plan
Implementation
Results Tracking and
Reporting
Supplier Relationship
Management
The earlier Procurement is involved in the sourcing process, the
greater the savings achieved
Procurement Ambassador Mira Ristovich – [email protected]
Savings Realisation Model
© 2010 Accenture. All rights reserved. 13
Savings report will be compiled in LADDS and will be calculated in USD, Rands and Local Currency.
Approved Vendors
Approved Courses
Prices per Vendor
% of Savings
Data Input
LADDS monthly reporting
Savings Report:
• Total Savings in USD
• Total Savings in Local
Currency
• Total Savings in Rands
• Spend in vendors/courses not
approved
LADDS
Data Output
Organisational benefits achieved
– Robust approach
– Selective scope
– Benefits tracking
– Cross-functional teaming
– Change management
– Business case targets
• Well-exceeded the business case targets, with 26.82% (vs. 20%) savings
• 92% (vs. 50%) reduction in vendors for the in scope competency clusters
• The estimated number of attendees for the in-scope courses showed that
MTN expected to train 49% more people than in the previous year
• The total training costs would actually reduce in real terms.
• The quality and consistency of courses being delivered has increased and
stabilised respectively.
© 2009 Accenture. All rights reserved. 16