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Case Studies

Case Studies

Procurement Case Study

A Fortune 500 worldwide software company spending hundreds of millions of dollars annually and operating at below industry norm margins realized that a controlled and reduced corporate spend would significantly improve the bottom line and the stock price.

Analysis indicated that less than 20% of spend was pre-approved, minimal use of approved vendors, most AP payments are approved “after the fact” via invoices, less than 25% of corporate spend was covered by a purchase order, purchasing processes do not reflect actual practice, difficult to have any sustained cost savings strategy.  Opportunities identified included on-going tracking of corporate spend, improve purchasing processes, including making purchasing easy for user, leveraging total spend via volume purchasing agreements, strong negotiating and an upgrade of purchasing skills.

Recommendations included deploying an automated purchasing system including purchasing “P” cards, on-line catalogs for day to day items, updated purchasing processes to represent future state, transition purchasing from being reactive to proactive, providing on-going training and recruitment to upgrade the team.

Execution identified a cross functional team from Purchasing, Accounting, Information Technology, User groups, Executive admins. to research, specify and recommend a system, assigned responsibilities, set quality targets, deployed new processes and system worldwide in phased approach with transitions, monitored system performance and modified as required, employed appropriate personnel to train, administer system and deploy on-line catalogs.  High level results included unapproved spend reduced to 1%, over 2400 “P” card transactions monthly (over 50% of purchases), over 40 on-line catalogs available to users, cost savings/avoidance of 10% year over year.

Sustainability established Quality Review Process, reviewed metrics, identified areas of opportunity and corrected them, reviewed and improved process issues and ensured the organization was self sufficient with the new process and was achieving agreed goals.