Case Study: Sourcing success through restructuring the procurement function

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Volition logo 2008 new.jpgContext

The procurement function of a large South African facilities management specialist was underperforming - the function was characterised by inadequate risk mitigation and limited strategic influence.

Concurrently, the facility manager’s primary client, one of the South Africa's major telecommunications service providers, contractually raised the facility manager’s Key Performance Indicators (KPIs). The context demanded wholesale changes in structure, processes and governance - a turnaround challenge that was presented to Volition.

Expertise

Volition’s procurement optimisation methodology is to enhance changes to organisational structures, contractual management and processes. Through the implementation of sourcing and commodity strategies, the Business Process Outsourcing (BPO) specialist is able to increase savings opportunities and mitigate risk between client’s and their end customers.

Solution

Volition’s brief was to assess the impact of the procurement function within the organisational structure as well as in terms of human capital. Targeted savings opportunities were to be identified. The ultimate objective was to ensure a continued relationship with the facility manager’s primary client, taking engagement with this major telecommunications player beyond the existing long-term contract. Successfully restructuring and implementing the facility manager’s procurement function, roles and responsibilities, the Volition team followed a two-phased approach, applying a range of tools, namely:

• A procurement assessment tool;
• A competency assessment tool for functional staff;
• Maturity matrix mapping tool;
• SCOR® Level mapping and process benchmarking to best practice blueprints; and
• The Volition Strategic Sourcing Methodology

Result

The project achieved substantial changes to organisational structure, contractual management and processes.  A range of relevant new positions was generated, combined with a definition of measures and skills requirements for all functions. Alignment between the facility manager’s major customer and its supplier base was enabled.

Cross-functional sourcing teams were formed. Sourcing strategies that were specific to target commodities were developed and implemented. This culminated in contractual awards to suppliers and assignment of commodity ownership to key individuals and team stakeholders.

The ultimate prize, however, was the value benefits of 3 - 25% (average 19%) that the project unlocked, together with effective governance processes put in place.

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