Over $5MM Savings Through Strategically Sourcing Legal Spend – Case Study

Managing professional services spend is always a challenge – often vendors have deep relationships with key stakeholders within a company that can lead to suboptimal engagement of the right external capabilities and diminished value. To be successful strategic sourcing must use data and a fact-based approach in close collaboration with key internal stakeholders to deliver the optimal results – here is an example of F500 company Legal Sourcing exercise that delivered significant savings for the organization.  SITUATION  The Corporate Legal department had over 200 law+ firms servicing their various corporate needs. Numerous firms were one-time use only, many were engaged for one case only, and others were routinely given new cases due to an existing relationship with the firm or one of its lawyers, and not based on their core capabilities or the best value provided.  The company did not have formalized guidelines or procedures in places to manage legal spend – each law firm was managed individually, or even worse, each case was managed differently. There were no negotiated rates in place for external counsel.  An e-billing system was in place, but was used poorly and often not at all. A new General Counsel joined the Company with one of key goals of applying cost management practices to law firms and external services as part of Company’s overall profitability drive.  He was supported by the Category Lead, Jo Ellen Hatfield, a member of the OnDemand Professional Network. APPROACH    First, to gain an understanding of how firms are selected and assigned a case, Jo Ellen met with Legal team leaders of each practice area to understand their key requirements, and their process for selecting, engagement and...

Cost Reduction Through Near Shore Manufacturing Optimization and Low Cost Country Sourcing

A major consumer products US company aimed to significantly reduce COGS through their OPEX manufacturing strategic plan.  The company understood that in order to significantly reduce COGS, they needed to diversify their manufacturing footprint and simultaneously optimize the Product Portfolio, and Low-Cost Procurement and Low-Cost Manufacturing Practices. SITUATION OVERVIEW The company had a number of plants across different regions in the US but no international plants.  The current manufacturing footprint could not sustain the market pressure caused by the lower prices of competitors with plants in Asia and Latin America despite all the cost reduction efforts.  Driven by the new aggressive cost reduction mandate Senior Management decided to start up a manufacturing plant in Mexico to take advantage of the low-cost manufacturing labor in the country as a key strategic initiative to reduce COGS and improve EBITDA. The company hired OnDemand Professional Network member Juan-Luis Munoz as the VP/GM of International Operations to lead this strategic endeavor. APPROACH The team first performed an assessment of the OPEX Current State, Product Portfolio, Manufacturing Network, OTC Lead Times (Order-To-Cash) and top spending accounts. The company graded poorly along several high-level OPEX critical elements:  Fragmented and isolated improvement effortsLack of manufacturing standardization and best practice deployment systemPeople engagement, motivation and empowermentStructural misalignmentUnstandardized KPI measurement and reportingBusiness macro flows not properly connectedObsolete manufacturing methodologies Understanding the current state was crucial in planning a successful manufacturing plant in another country.  Among other things, the team uncovered significant manufacturing practices being conducted with the use of “tribal knowledge” only. When some level of standardization of processes was found, this was executed by multiple individuals in different...

Procurement Approach To Sole-Source Vendor In Monopolistic Market

One of the largest biotechnology companies in the world needed to quickly develop a strategic supply agreement with a sole-source supplier before impending contract expiration. With no existing category manager or in-house expertise, and little time for execution, they were looking for a specialist who could identify opportunities for value, develop the sourcing strategy, and help them implement a long-term supply agreement that would lock in the value. They turned to OnDemand Professional Network member Art Brunton. CHALLENGE The sole-source nature of secondary data made it nearly impossible for the client to avoid significant annual price increases. They also had little control over the assurance of supply, quality and service of the data. In addition, all of the industry competitors procured the same data sets, so the competition for the supplier’s performance was extraordinary. Proprietary data types – the supplier was sole-source because they owned data technology and supply sources that no other supplier could offer or penetrate. For nearly 30 years, the main barriers to entry for additional suppliers were technology, cost of entry, and access to data sources. There was no potential alternative to the supplier on the horizon either.Data set obsolescence and rationalization – the client did not have a grasp on the data sets they were purchasing on a regular basis versus what was actually needed. Therefore, potential obsolescence and rationalization were not clear.Fragmentation in spend across the client’s organization – the client had numerous groups within its US organization buying other products and services from the supplier. It also had many other business partners globally buying the same secondary data sets. However, consolidation of spend was not occurring...

Engage Consultant For Rapid Procurement Transformation and Fast Time To Savings

SITUATION OVERVIEW A newly hired CPO was not going to be able to be fully engaged with his new company, a national transportation equipment and service provider, for several months.  The Company’s leadership had high expectations and had set aggressive savings targets for his first 12 months.  Realizing that it takes time to understand the spend and opportunities, the CPO engaged Chris Lemnah, a long standing member of the OnDemand Professional Network to quickly analyze the spend and conduct the initial opportunity assessment (“OA”). APPROACH Chris kicked off an opportunity assessment consisting of stakeholder interviews, PO & AP spend analysis, and contract reviews.  He also spoke with the existing procurement team members to better understand their current focus, as well as past activities. The information gathered was used to create an OA package that presented the opportunities across 4 workstreams: ControlsKey Customer InitiativesSpend Reduction TeamsTechnology Enablers The Controls workstream focused on getting Procurements involved up front in supplier selection, vendor master additions and maintenance, contract reviews, and requisition approvals. Key Customer Initiatives the team was involved in included enterprise-wide initiatives for Telecom, Benefits, and Oracle. Spend Reduction teams focused on a myriad of projects in various areas identified during the OA and brought to the team by other departments. Chris sourced and implemented multiple technology solutions for the client to help organize and solidify their sourcing and contracting processes. CRITICAL SUCCESS FACTORS Engaging & Aligning Stakeholders – Finance, IT & Operations were all engaged to help understand their impressions of the current procurement team and where they thought procurement could add more value.Data Integrity – despite having relatively few...

Multiple Procurement Cost Reduction Strategies Drove Fast Savings Across Diverse Spend For Ground Moving Equipment Manufacturer

A PE-owned mid-market ground moving equipment manufacturer needed to quickly drive procurement savings ahead of impending major transactions. With disaggregated spend and vendor concentration across direct and indirect categories, they were looking for an expert who could quickly identify opportunities and help them execute varied strategies to maximize savings in the shortest period of time. They turned to OnDemand and selected a member of our Professional Network Kenton Phillips. CHALLENGE The mid-market position and spend levels of the company required lean, rapidly executed initiatives to maximize the project ROI, but the diverse range of products and services in scope necessitated a range of category-specific approaches to achieve the maximum savings. Multiple categories with a wide range of volumes – the category characteristics and varying spend levels required multiple different sourcing strategies to be planned and executed in a short timeframe.Product specification rationalization – the rationalization of specifications required by some categories drove the review of hundreds of engineering documents and substantial engagement with engineering personnel across two company locations.Sole-source products and limited switching capability – other categories had limited alternative vendors or were limited in the client’s ability to switch leading to the need for sole-source, limited-source and time-phased sourcing strategies. APPROACH Client-tailored and category-specific approaches were designed to rapidly capture the greatest amount of savings within the limited timeframe. Assessment and quick hits – during the assessment, categories were grouped by sourcing technique and other characteristics to accelerate the capture of quick-hit opportunities and enable the most efficient and effective strategic sourcing execution.  Some of the quickest savings results were achieved by leveraging group purchasing and volume concentration...

Strategic Sourcing for Pharmacovigilance (PV) Services – Creating a Collaborative Environment to Improve Services and Reduce Costs

Sourcing is often designed as a cost saving exercise. However, in the case of complex services that are integral to an enterprise success, sourcing can often result in a better solution for the organization, not just savings. We like to think of this as a win-win opportunity – better service levels, lower costs – and if driven/supported by senior leadership can reap great rewards. Below I share an excerpt from Dave Stowe, a long-time member of our OnDemand Professional Network, that I think exemplifies this kind of complex sourcing – this time at a high-growth BioPharma company that was outgrowing the capabilities of it’s Pharmacovigilance Services (PV*) provider. SITUATION OVERVIEW A rapidly growing $1.3B biopharma company with 12 drugs on the market and ongoing drug development, needed to find a new supplier for PV services.  As a result of the company’s rapid growth over the preceding 8 years, the incumbent supplier was unable to meet service level requirements creating a sizable business risk.  The client had increasing concerns about the incumbent’s capability to respond to audits in a timely manner; rapidly scale to support spikes in volumes; and support advanced analytics and insights. As a result, executives including the EVP of R&D, CFO and CEO approved a sourcing effort to find a new service supplier and technology platform. To lead the sourcing effort, the client brought in Dave Stowe, a member of the OnDemand Professional Network with deep pharmaceutical industry sourcing expertise to work with the VP of Patient Safety, scientists and the IT organization.  APPROACH The client created a core team with representatives from PV, IT and procurement...