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Profit from ProfessionalProcurement“Don’t tell me where your priorities are.
Show me where you spend your money
and I’ll tell you what they are.”
- James W. Frick
www.exceeding.co.uk
“The importance of cost savings should not be forgotten as the world of procurement changes” (‘Supply Management”, October 2018)
Procurement is rightly focused on compliance, CSR objectives, the quality of what is procured and many other objectives beyond cost savings alone. However with continuing uncertain economic outcomes, it is essential for any successful organisation to have an optimised cost structure – and ensure that it is constantly reviewed and challenged to deliver optimal value.
Very few organisations achieve this consistently, due to other relentless business pressures and demands.
Let’s look at why.
Focus on cost optimisationControlling costs is not just a ‘nice-to-have’ - in tough economic times, it’s essential.
Profit from professional procurement
When it comes to keeping your costs under control, there is no one-size-fits-all answer that will work for every organisation. The industry sector, size of the organisation and its own particular supply chain needs will all combine to determine what is appropriate.
Most organisations we work with are unsure if they are getting best value for money across all spend categories, or from significant one-time procurements. A lack of category and supplier landscape expertise, inaccurate spend data or a focus on tactical rather than strategic procurement may all be contributors. Our teams will help you ask the right questions and focus on your finances, processes, systems, suppliers and spend to identify where you can deliver most value. From identifying cost savings, improving your business strategy to positioning your procurement team’s value-add in the organisation – our benchmarking services allow competitive market analysis and ultimate procurement insight to develop your sourcing strategy.
Typically we can help you to optimise your spend through consolidation and supplier rationalisation, and create best value for your business through targeted negotiation and management of complex tenders. Ultimately we help you to extract longer-term benefits with supplier management programmes.
It’s time to ask the tough questionsBut it’s getting the right answers that’s critical. What’s the best result for you?
eXceeding manages hundreds of complex procurement projects across the UK and Europe in both public and private sectors. We have clients ranging from the NHS and MoD to major Blue chips, financial institutions and consultancy firms.We see procurement as a critical business process that must evolve with your organisation, not just a support function. Often, when clients first approach us they have rarely optimised their strategic sourcing process across their spend categories, or in one-time large purchases. Yet if well-managed, procurement can bring significant value and bottom-line savings to your organisation.
At eXceeding, we bring experience from many different sectors, broad supply base and sizes of organisation – and because we understand that all organisations are unique, we can develop an approach that is most appropriate for you rather thana standard, rigid methodology. Plus we can support that with wide category knowledge, management of large-scale investments and benchmarking experience.
Profit from professional procurement
Why organisations can find their cost focus diminishes The pressure of daily business can mean that any organisation may find themselves struggling to maintain a focus on their spend profile and procurements, as more immediate demands constantly divert their attention from strategic priorities.
Here we identify six of the most common barriers to optimising buying power.
1 2 3
6 Common Challenges
4 5 6
Lack of capacityand staff
Limited visibility of spend data
Incomplete category / market
knowledge
Restricted access to benchmark cost
data
Unwillingness to challenge status
quo
Failure to measure & monitor supplier
performance / track contract
renewals
Profit from professional procurement
What can you do?Working with a Consultancy can feel alien but at eXceeding we work as an extension of your team and can be as visible or not as required.
eXceeding’s leadership team and consultants bring a unique insight into supplier management, negotiations and renegotiations having sat both sides of the corporate negotiating table. Our teams have structured and negotiated complex multi-million pound deals, across numerous industries and categories of spend, from both the supply and buy side. Our experts provide real-world insights into the art of the possible and work with you to ensure that a fair, balanced and transparent deal is structured, which creates long-term value and sustainable benefits.
Here we show how we can resolve the six common challenges.
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By working with eXceeding you would have access to:
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The right resource and experience for the time needed we can ramp up / down bandwidth
as needed to meet your priorities and objectives
Spend analysis experts – eXceeding can support in the assessment of your current spend data and
also advise on the correct tools and processes that should be implemented
A team of category experts with specific industry experience
and market knowledge
Readily available benchmark data and capacity to manage bespoke benchmark
exercises
Strategic consultants able to develop the
sourcing strategy and build the business case
to influence change
Supplier Relationship Management experts with industry standard
best practices, tools and processes to
manage and measure supplier performance and proactively plan contract renewals
Profit from professional procurement
6 reasons organisations struggle to ‘self-fix’
So, why do we struggle to fix the problem?
Having identified where cost control is most pressing, even the largest organisations can run into difficulties trying to fix it. Most commonly, it’s insufficient bandwidth and time coupled with a lack of access to relevant data and expertise.
Here we identify six of the most common difficulties.
1 2 3
4 5 6
Absence of or over-worked
dedicated procurement function
Decentralised Procurement – adhoc
purchases
Not knowing‘what good looks like’ to check cost effectiveness
Lack of capacityto manage multiple
benchmarks to check cost effectiveness
Reliance on existing supplier and fear of
change / upsetting the status quo
Poor systems / adoption of standard processes or
toolsets
So how best to move forward?
Profit from professional procurement
Engaging external expertise can make a big difference
Regardless of your industry / sector, working with external procurement professionals will allow you to utilise their extensive category knowledge and procurement experience to optimise your spend, source goods and services whilst managing the supply chain. Whether you need to complement your in-house team working on specific opportunities or you have no dedicated procurement function and require end-to-end sourcing engagement – eXceeding is a very cost effective way to manage spend, improve collaboration and restructure commercial agreements to achieving organisation-wide efficiencies.
Consider a partnership approach Achieving your goals
Profit from professional procurement
From our experience of supporting clients in all sectors, we can help you at each stage of the process by optimising your costs and increasing your purchasing power – from conducting in-depth spend analysis and diagnostics, identifying specific opportunities, to developing your strategic sourcing strategy and executing the implementation. In the following pages we will look at how we can support you throughout the journey.
Day-to-DayProcurement
Supplier Management
Cost Savings Stages
Spend Diagnostics
Define StrategyOpportunities & priorities
Execution
Meeting cost reduction targets can be hard. Understand how you can reduce your cost base sustainably and increase your profitability and competitiveness.
Bringing your organisation’s spend under control
Commonly-encountered issues:
• No consistent data to give clear centralvisibility of our spend
• 10-20% of the least-bought items areresponsible for around 60-70% of the hoursspent on purchasing
• Spending authority is widely dispersed throughthe organisation (p-cards, expense claims etc.):low-value spend not managed
• No central contracts register, to ensure timelyrenegotiations
• Too many suppliers duplicating / providingoverlapping services
• Scope creep over time with many contracts /lack of change control
How eXceeding can help by:• Benchmark the current spend• Analysis of the data: determine priority by
criticality of need and category.• Understand cost drivers• Identify achievable savings• Prioritise options:
- Consolidate and leverage spend - Retender key services - Optimise supplier base - Renegotiate current contracts
•Improve SLAs / Payment Terms / FeeStructure
Customer outcomes:• Reduced net spend / lower overheads
• Allow your internal teams to focus on whatthey need to do, which requires internalorganisational knowledge
• Better supplier relationship management
• More efficient / rationalised spendingmechanisms
• Appropriate and effective, consolidatedsupplier base
• Demonstrable cost savings / impact on thebottom line
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SPEND DIAGNOSTICS
We scope business requirements, review needs / demands, assess alternatives, understand the market and suppliers, prioritise approach to meet stakeholders’ expectations. Procurement processes can be difficult to navigate, particularly if you are less familiar with a certain category, or marketplace. That’s where you may need specialist support.
Identifying the needs, understanding the supply base and considering the options
Commonly-encountered issues:• No subject matter / category experts• Lack of industry / supply base knowledge• Business requirements unchallenged – needs
vs wants - must have vs nice to have• Reliance on incumbent suppliers – innovation
lacking, reluctance to change• Agreements auto-renew without retendering
or renegotiating – leading to price increases• Contracts expired or expiring – leaving
business open to risk• Incomplete options analysis: make vs buy
review / in-source vs outsource?
How eXceeding can help :• Deliver SMEs and procurement resource• Supply industry specialists with market
knowledge / supplier contacts• Draft qualified specifications based on
objective requirements / actual needs• Compile a short-list of qualified providers able
to challenge the incumbent• Review all Agreements and Contracts –
provide renegotiation plan by criticality (risk /spend)
• Advise on contractual protection / riskmitigation
• Conduct options review and recommend bestsolution for your business needs
Customer outcomes:• Increased category expertise via knowledge
transfer• More cost-effective services or supplies• Short-term savings and proven reduction in
long-term TCO (Total Cost of Ownership)• Better managed supplier relationships• More effective SLAs / measurement in place• Minimised pain of transition from old to new
suppliers• Robust contracts and agreements• Strong commercials and reduced risk• Accountable consultants from start to finish:
outcome-oriented support
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OPPORTUNITIES AND PRIORITIES
Does your organisation have a clear focus on how to manage spend, optimise agreements, reduce costs, improve quality and deliver value? Is there a defined process for your strategic spend categories and significant purchases? If not, then it’s time to develop a strategy.
Creating maximum value through defining an optimised sourcing strategy and procurement approach
DEFINE STRATEGY
Commonly-encountered issues:• What does an optimised spend profile look
like for our organisation?• Is there a sourcing strategy – and is it aligned
with the overall business strategy?• Can we distinguish strategically-critical
‘needs’ from the non-essential ‘wants’?• Has cost-cutting in the past been random,
unfocused and detrimentally affected quality?• Have the costs of back-office processes and
procedures been reviewed?
How eXceeding can help by: • Analysing and understanding your current
spend (see ‘Spend Diagnostics’)• Developing a strategic sourcing plan that
enables you to realise your business strategy• Assessing your market sector, size, and
structure plus typical needs• Advising on how to streamline your
procurement processes to deliver maximumvalue
• Assessing hidden costs, presenting astrategic spend management and continuousimprovement plan
Customer outcomes:• Achieving a better business with lower
direct and indirect costs• Measurable goals to accomplish the
vision and mission• A pragmatic solution: adaptable and fit
for the next stage of your growth• Value creation (cost optimisation)
embedded in the culture: encouragingand incentivising employee ownership
• Contracts and agreements that protectyour organisation’s interests and needs
• A fit-for-purpose supply base alignedwith your core values and objectives
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If you have the strategy and you have the processes – but you are short of experienced resources when you most need them most, that’s when the best-laid plans can go wrong.
Ensuring that a procurement strategy or project is delivered: on-time, on budget and in-scope
Commonly-encountered issues:• A generalist procurement team is
available but without the specialistexpertise for a specific task or project
• Short-term cover is needed for a keyteam member’s absence
• Workload is project based and a full-time resource would be under-utilised
• Variable skill sets are needed fromtime to time
• Flexible resourcing (skills and capacity)would greatly enhance your businessefficacy
• The cost of hiring a full-time resourceis too great (fully-loaded cost)
How eXceeding can help:• Supply an interim procurement
specialist for a fixed term contract• Provide specialist consultancy support
on a fixed-price or T&M basis –either for short-term or longer-termengagements
• Spread a task between differentsubject matter experts and managethe outputs
• Provide valuable contingency support:i.e. no single point of failure
Customer outcomes:• Maximum flexibility if the duration of
the requirement is not clear• Specific expertise or know-how
available for each stage of the processand project
• Saving the time and cost of afull-time recruitment exercise
• Ensuring that a project is deliveredand seen through from start to finish
• Resource made available when it is neededand not charged for when it isn’t
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EXECUTION
Just like any business function, procurement cannot do everything: sometimes there’s just too much to manage.
Working with eXceeding The right answers to complex questions
If you want to drive change in your organisation but require support identifying the opportunities, managing priorities and implementing strategies, eXceeding procurement professionals can help build the understandings, engage the right functions and map out the most appropriate approach.
eXceeding’s procurement and supply management expertise – together with our experience of managing complex bids and tenders – gives us a unique insight into the complete strategic sourcing cycle. Thats insight that can help you deliver organisational efficiencies from product quality improvements, optimised service levels, streamlined processes, to bottom-line cost savings.
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eXceeding’s consultants deliver expert procurement support to all industries. We have a strong, experienced team of specialist advisor’s, from director-level to category managers and subject matter expert consultants, providing client-focused services.
To discuss a fresh approach to making procurement work for you, contact:
03333 555 116
www.exceeding.co.uk
About eXceeding
© Copyright Exceeding Ltd 2019 eXceeding Limited 2-3 Blotts Barn, Brooks Road Raunds, Northamptonshire NN9 6NS. Company Reg No: 7706566, VAT Reg No: 117 3396 16
