Wipro’s Procurement Process Rationalization Services results in 14% average savings for a leading Commercial Bank

Services:a) Bank's Processes & Defining Project Objectives

! Identifying cost reduction areas ! Preparing a road map for potential cost takeout areas ! Methods to identify and implement reductions covering both

Operational as well as Capital expenditures. ! Implementing Cost reduction through sourcing process

intervention and technology enablement.

b) Spend Analysis, Classification and Process Re-definitionGap Analysis:

To identify the cost reduction areas in the Bank, Wipro undertook a

comprehensive Spend Analysis using the historic data to classify the

spend as Operational Expenditure and Capital Expenditure. In the

absence of a centralized procurement cell and lack of proper data

capture mechanism, collection of historic data was a challenging task.

Process Consultants consolidated the raw data from the payment desk

matching it with the actual transactions.

The various spends of the bank were classified using the Wipro's

Spend Management Framework. The analysis was done department

wise as well as category wise. Each spend was classified on the

following parameters:

As the bank entered the expansion and growth mode, it was essential to

adopt a more structured approach to procurement process. The

procurement process was decentralized and highly transactional in

nature. Multiple departments used to buy commodities from multiple

vendors at different prices leading to inefficient buying and duplication

of efforts. Since there was no central repository of vendor database,

strategies like vendor consolidation and volume consolidation could not

be explored for negotiation to achieve significant cost reduction .

Wipro undertook a project to develop and implement procurement

strategies for the Bank with the objective of

!

!

Resource Criticality Vs Market ComplexitySourcing flexibility Vs Current Buying Effectiveness

Based on the analysis, supplier landscape analysis was done and

specific cost reduction strategy was formulated to address items

depending upon which category it belonged to ie Marketing,

Stationery, IT, Credit Cards, Personal Administration, Transactional

Banking, ATM, Branch Set-up, Phone Banking, Merchant Banking

and Administration.

To develop cost reduction strategy for each category and prepare a

procurement roadmap for the departments, Wipro conducted a series

of meetings with the internal stakeholders to map the as-Is process of

each department and suggested the To-Be process. This included

drafting of Standard Operations Procedures, defining processes and

policies (for ex. domestic travel policies, car hire policy and booking

process). Wipro also facilitated change management in the Bank, to

ensure a smooth adoption of new processes and acceptance to new

negotiation strategies and credit sharing issues.

Wipro proposed a centralized procurement cell which can act as a

single window for all supplier interaction. The spend analysis

highlighted the possibility of consolidation of volumes on common

purchases across departments in the Bank. The higher volumes

enabled the bank to leverage its brand and buying power to negotiate

better prices. The analysis also focused on vendor consolidation. In

some categories Identification & qualification of new vendors were

proposed. Introduction of a single vendor across the country for some

of the service areas such as travel agents were recommended.

c) Categories handled & Average Savings achievedWipro has so far addressed approx. Rs. 60 Crores of spends with an

average 14% reduction on the total spends. A broad list of department

wise savings achieved and categories handled is given below table:

Key benefits:Some of the tangible benefits of these strategic cost reduction initiatives

are:! Transparent negotiation process through technology enablement! Average 14% projected savings for the contract period of the total

spends addressed.! Aggregation & Consolidation of volumes and Vendor

rationalization! Availability of standardized specifications, for future reference, for

the categories handled by Wipro.! Institutionalized procurement process leading to cycle time

reduction in negotiating with various vendors! Identification of the existing trends in the market and getting a feel

of the real-time market situation.! Single window for the supplier community to interact with the

bank.

CASE STUDY | Wipro's Procurement Process Rationalization Services results in 14% average savings for a leading commercial bank

The Travel Management Case

The Marketing CollateralCase

The bank spends INR 10 million annually on air travel across the country

with most of the air travel originating from its head office at Mumbai and

processing centre from Chennai. Jet is the most preferred airline and the

employees place direct booking requests with the travel agents without

involving the admin or any other dept from the bank. Travel undertaken is

usually unscheduled at a short.

Challenge: With its wide spread presence across the country the bank had 45 travel

agents to service its travel needs. The travel booking process, payment

mechanism, MIS tracking and capturing systems were not standardized.

Bookings were done at uncompetitive market rates and the travel was often

unscheduled.

Approach taken by Wipro:! Gap Analysis with process mapping of the as-is scenario and

transformation of the same into an efficient to-be scenario. ! Invitation & Assessment of best in class bids to fulfil cost criticality

factor. ! Recommendation for corporate tie-ups with major airlines to receive

volume leveraged best fares.! Evaluation & Deployment of two travel agencies with commercials &

services at par on a equi-business volume basis in line with the banks

multi vendor policy.

Results:! Travel Booking Process Effectiveness through consolidation of

vendors! 4% direct saving on air spend as IATA commission return on basic fare

from the agency. ! Identification of potential savings worth 13% through effectiveness in

booking process and Airline tie-ups.! Effective Travel Policy compliance measures.! Satisfied management and travellers

Total annual spends approx INR 50 million p.a. across all the regions for

standardized marketing collaterals.

Challenge: ! Negotiations done separately for each event / campaign without

consolidating the requirements. ! Multiple Product managers interacting directly with the vendors for

seeking quotes. ! No standard specifications available for any items. ! Formal process of placing PO on the vendor not in place.! No quality checks.

Approach taken by Wipro:! Consolidation of the entire requirement, vendor rationalization ! Drafting SLA's for the vendors, arriving at standard specification

sheets for all the items! Suggesting alternate products for cost reduction! Online negotiation of all the items.

Results:! Average 25% cost reduction across all the items with clear

specifications to be followed by the selected vendors! Negotiation Cycle time reduction.

Appendix- Approaches in DepartmentsThe SMS Case

The Insurance Case

The bank sends over INR 60 million of SMS p.a, for Push and Pull

requirements, for marketing its new products, promotional offers and to

its own customers related to their account with the bank. This

requirement is spread across various departments in the bank such as

Marketing, Credit Cards, Collections, Direct Banking, and Equities etc

who interact with various vendors for their requirement.

Challenge: Since there has not been a single face from the bank to interact with the

vendor, the vendor has been charging different rates for different

departments for providing the same service.

Approach taken by Wipro:! Consolidation of the entire requirement across the bank.! Defining the services required and the SLA's for each department.! Inviting new vendors to quote for the entire requirement, thereby

increasing the competition.! Conducting an online negotiation amongst the interested bidders,

thereby bringing complete transparency.

Results:! 47% reduction on the overall spends on this category! Standard rate across the bank ! SLA's with the vendors documented for future reference

The bank has taken over 20 insurance policies and spends approx INR 50

million p.a. on Insurance Premium. The Standard policies taken by the

Banks to cover their Employees, Assets and Account/Card holders

include Fire Insurance, Personal Accident Policy, Kids account policy,

cash in transit policy, Car Policy, Laptop insurance, group Mediclaim

policy, Debit card policy etc.

Challenge: All the Policies are renewed at different times during the year which

reduces the bargaining power of the bank to negotiate a better premium

rate. No negotiations can be conducted for Tariff based insurance

policies since the premium is governed by IRDA. There is a strong

dependence on the current insurance service providers to suggest to

changes in the policies / drafting new policies without proper exposure of

market trends.

Approach taken by Wipro:! Consolidation of all the policies taken by the bank.! Floating the consolidated requirement giving all the necessary

details in terms of locations to be covered, perils covered, claim

history etc to the existing 3 insurance companies & 4 new vendors

introduced by Wipro. ! Offline negotiating of the premium charged for all the policies with

renewal at different timelines.

Results:! Average 10% reduction on the non tariff based policies due to

consolidation of the entire requirement for negotiation and

introduction of new insurance service providers.

CASE STUDY | Wipro's Procurement Process Rationalization Services results in 14% average savings for a leading commercial bank

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Approach taken by Wipro:

! Gap analysis of as-is scenario with transformation into to-be

scenario. ! Evaluation of the gateway as a cost effective measure.! Generation of forecasts to assess various owner ship models of the

telecom gateway.! Suggestion of a pilot evaluation period at the corporate office

location addressing a annual spend of INR 1.6 million with

extension to other such hub locations on successful operation.! Suggestion of implementations across similar locations to realize

savings.

Results:! Achieved savings of 15% on the annual telecom spends for the

corporate office.! Clear Road map for the bank for similar implementations at other

hub locations.! Synchronization with banks philosophy of latest technology

leverage.

Credit Processing & Verification Agencies CaseThe bank spends over INR 500 million p.a. on CPA/CPV across the

country & is one of the complex and highest spending area for the Retail

Assets and Credit Cards department. CPA (Credit processing agencies)

and CPV (Contact point verification agencies) are the agencies which

help the bank and its credit team to take the final decision on the Credit

disbursal/non-disbursal to the applicant any loan or credit card.

Challenge: ! Managing more than 800 vendors across the country.! Differential pricing by the vendors for the same services.! Differential pricing across different product lines having similar

scope of services.! Process Automation tool not fully leveraged across all the product

lines.

Approach taken by Wipro: ! In depth analysis of the past and current CPA/CPV process, cost per

application payout, region and vendor distribution etc ! Recommendations on vendor consolidation opportunities across

various product lines / regions and the two groups were given.! Process mapping of Two Wheeler /Auto Loan /Personal Loan

/Business Loan etc and recommendations on changes in the existing

process which can lead to wastage reduction and reduction in cost

leakage.! Standardization of agreements with all vendors across the country.

Results:! Projected savings over 4 % on the overall spends of CPA/CPV! Standard CPA/CPV rate and agreement across the bank! Reduction in over all Turn around time of the entire process! Reduction in rework rate of CPA/CPV process at different stages

The Cab Hire Case

The Telephone Case

The bank spends INR 20 million annually on taxi hire and car travel

across the country. Cities traveled to are tier-II cities with distances

ranging from a minimum of 100 km to a maximum range of 400 km

from the bank based on a hub spoke model, tier-I cities or metros

forming the hub locations. Usually the employee requests this travel

through the local car rental agency enrolled by the regional

administration department. Payments were done personally after travel

completion or collected from the administration who forwarded the

claims to the central payment desk.

Challenge: Payment mechanism, policy compliance and MIS systems were not

standardized. The ledger system carried general conveyance charges

under the taxi head which gave an erratic picture of the expenditure

incurred. Vendors complained of delayed payments, employees not

signing bills, getting transferred from the locations resulting in unpaid

payments. Spend visibility was a biggest challenge which resulted in

poor negotiations with the vendors.

Approach taken by Wipro:! Gap Analysis with process mapping of the as-is scenario and

transformation of the same into an efficient to-be scenario.! Evaluation of Car Rental Agencies providing best in class corporate

taxi travel services region wise! Recommendation of a single Car Rental Agency with a backup

agency at each of the locations. ! Generation of a SOP (Standard Operating Procedure) for car / taxi

travel request and payment process. ! Selection and Deployment of Car Rental Agencies across major

bank regions.

Results:! Car Rental agency consolidation.! 10% direct savings through negotiations on all travel parameters.! Standard booking & closing process across bank regions.! Effective policy compliance measures! Satisfied management and travelers.

The bank spends INR 20 million approximately on telephone calls across

their locations of which 40% calls are to GSM (mobile) phones. Challenge: With increase in mobile telephony across the country it is rampant that

individuals tend to make calls to mobile numbers rather than direct land

line numbers. The landline to mobile call traffic forms a substantial part

of the billing. Wipro evaluated putting a telecom gateway that could

convert landline originated calls into cell phone calls, which could result

in cost saving. The gateway carries channels that could hold a minimum

of four sim cards at a time which can be described as 4 cell phones

functioning simultaneously. EPABX lines would be connected to the

gateway thereby routing calls from DID (Direct Identification) numbers

to the gateway. Thus the gateway would detect calls to cell phones and

route them through the simcards.

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CASE STUDY | Wipro's Procurement Process Rationalization Services results in 14% average savings for a leading commercial bank