Initial increase visibility of cost saving programmes with workflow solution
Process Director based procurement system offers local procurement teams at Initial hygiene increased visibility of the direct and indirect cost saving opportunities available to them through central procurement.
Initial, a global leader in hygiene services, wanted to improve how the business captured and reported cost saving programmes delivered by the procurement team.
Total cost saving programmes, including procurement cost savings, are in place across all operations and are monitored monthly with savings of £50 million achieved last year.
Procurement is divided into three teams and reports into the Chief Purchasing Officer. A central team is responsible for policy, managing supplier relationships and setting governance around contract thresholds, competitive tendering and sourcing. Category Managers for direct / indirect spend are tasked with identifying cost saving programmes with local teams in Europe, North America, Australasia and Asia responsible for implementing the program and delivering savings.
From reducing temporary labour costs in France to reviewing engine control units to achieve greater fuel efficiency, the team works closely with countries and individual business units covering key spend areas of IT & Telecoms, Facilities & Catering, Hardware, Consumables and Fleet to identify cost saving programmes.
In the past, a procurement specialist would negotiate a deal with a new supplier and notify every finance director. Unfortunately, the potential saving would not cascade down to the country / business unit or the team would fail to implement the initiative.
Initial previously used a complex spreadsheet to identify the benefit programme. Without a central repository, a lot of work was involved in the approval of benefit programmes.
Local procurement specialists would submit data every four weeks to the central team, providing a snapshot of their total cost savings in the month and year-to-date. Consolidating the information and managing the onward distribution of reports out to the business became very problematic. This complex manipulation of data in Microsoft Excel often rendered the analysis days or even weeks out-of-date. Inital needed access to the data in real-time and the ability to report an up-to-date position.
Another challenge was the lack of discipline surrounding the approval process. The guidance issued required people to seek approval from somebody of sufficient status within the business unit receiving the benefit who can drive through compliance. However, people interpreted the statement in wildly different ways, with proposals submitted lacking detail and justification.
The right procurement software tool for project was under the nose of Bob Woods and his team.
Procurement had detailed requirements including a cloud-hosted system to improve visibility and accessibility for key stakeholders around the world. The system also had to mirror - and improve on - the existing form with electronic forms (eForms) and a workflow. Equally important was the ability to access real-time data.
Replicating their existing spreadsheet, ePC created an eForm to collect and store relevant field data and unstructured attachments.
To initiate a procurement project, the user will select an existing benefit programme or create a new one. Once the Category Manager has selected the benefit programme, they will enter the project name, description, forecast saving, annualised or one-off (for each country the benefit will apply) and the start date. Some fields auto-populate such as the unique project reference and date with other fields user configurable drop-down lists including user/team/manager, spend type, category, benefit type, division, country and currency.
The user can save a partially completed form to their ‘Task List’ and return later during the investigation period. Once the investigation is complete, they can notify the Sponsor and continue to amend the form during the ‘In Progress’ stage.
An automated workflow handles the routing and notifications of the eForm.
Once the form is complete, the Category Manager may submit the form to the Manager followed by the Sponsor and Chief Purchasing Officer for approval. The project can be rejected back to the Category Manager for amendment and re-submission or deletion; in this scenario the Sponsor is notified. Notifications prompting users to complete tasks will be sent by eMail at timed intervals. Throughout the entire process, data is accessible through a web desktop that Users, Managers and Administrators have different levels of access to, and visibility of, depending on their role.
Results / benefits
Countries and business units now adhere to preferred supplier rules and have ceased locally orientated buying practices as the system has increased visibility of the direct and indirect cost saving opportunities available to them through central procurement.
Previously, the business was restricted to one report per month which took a day to collate and distribute. Today, access to real-time data allows Initial to produce an updated position within 30 minutes. Procurement specialists no longer ask for reports as they can instantly interrogate their data with reduced administrative burden placed upon the central procurement team.
Routing paper forms from person to person used to take days – or weeks. Using eForms, benefit programmes can be reviewed, commented on and approved in a fraction of the time. The workflow has brought structure to the process and enabled the central team to work more collaboratively with Category Managers and local specialists.
The system, including 700 imported legacy projects, has introduced much-needed discipline into the process and strengthened internal controls. Now, when benefit programmes are presented to the business with delivered savings, senior executives know the programme has been scrutinised during a rigorous sign-off procedure.
At the same time, the tool has given Initial the ability to screen benefit programmes before the Chief Purchasing Officer reviews the initiative.
More specific results included:
- Initial have reduced the administration, expedited the process, and improved the visibility of cost saving programmes
- 30-40 active users worldwide which is expected to increase over time as Initial ask countries and business units to drive programmes locally and deliver cost savings
- Nearly 400 live projects with in excess of 100 programmes authorised
Looking ahead, Woods and his team will review the opportunity to extend the system and embrace the entire savings reporting for Initial.
If you want to find out more about our procurement software and workflow automation, or wish to book a demonstration, please contact us.