Client: Global Telecommunication Company
Category: Global Procurement Initiative
Sector: Telecommunications
Situation
The market position of Allied’s international client, a large multi-national telecom provider, was under intense competitive pressure as a result of deregulation in the industry. New competitors were deploying next generation technologies and challenging traditional regulatory pricing models. To continue operating in this challenging environment, our client needed to rapidly adapt its business model to an openly competitive supply market.
With a renewed focus on shareholder wealth, PAI’s client wanted to identify significant trading partner financial opportunities by:
- Identifying the most opportunistic countries for immediate and two year cost savings
- Conduct an integrated, regional opportunity analysis to quantify the initial cost savings opportunity
- Construct the business case for a two-year strategic sourcing initiative to
- Deliver quick wins and category savings totaling $80M
- Sell in the two year cost savings program, based on the opportunity analysis results, to sixteen country heads
- Identify, propose and establish the ideal governance structure for the initiative
The overall spend, approximately $500 million, was fragmented across many local and regional suppliers, and minimally leveraged across the sixteen countries. Contributing to our client’s challenge was the fact that 40% of the employees in procurement roles were not formally part of the supply chain organization; they had little training in purchasing or category management skills. These individuals controlled 70% of the company’s spend.
Solution
PAI conducted a two-month opportunity analysis for the client in a sixteen-country, multi-lingual environment utilizing a five-consultant team, and identified and implemented the following:
- Twenty-four business-critical categories capable of delivering $80M in hard savings across 2 waves of rapid, strategic sourcing initiatives within two years
- A sixteen-country governance structure comprised of key executive decision-makers and stakeholders whom enabled and approved the sourcing strategies
- A restructured and virtual strategic sourcing organization located in seven countries, but serving the entire sixteen-country region
- Approximately $80M of hard savings, validated by the client’s finance department, within two years of the program’s kick-off.