STRATEGIC SOURCING
There has never been a greater need for a high-performing strategic sourcing function. Commodity volatility, technological innovation, evolving regulations, globalization, and increasingly interdependent supply markets have led to unprecedented complexity and pressure on businesses of every kind. In this environment, strategic sourcing organizations are challenged to perform.
Few, if any, procurement organizations have been able to leverage their purchasing power into tangible and quantifiable results. Financial data shows that most firms are seeing their vendor spend increase as fast – if not faster – than revenue growth, indicating that the high volume of sourcing activity is not translating to bottom-line results.
Despite the want to believe that technology is a ‘silver-bullet’, most executives recognize that technology rarely transforms average performers into super-stars. Process excellence, strategic sourcing know-how, and the will to overcome the barriers to success is a prerequisite for 15%-20% cost reduction, equivalent to 20%+ EBITDA increase.
CALL US WHEN
Our clients call on us when they want to improve efficiency in their procurement operations and establish strategic sourcing excellence. Our clients benefit from 15%-20% cost reduction equivalent to 20%+ EBITDA increase.
- You need to quickly identify areas for cost improvement and unlock cash in your supply chain
- You need to harness the strategic potential of procurement, more confidently contain escalating costs, capture the benefits of scale through strategic sourcing, and improve spend visibility
- You executed a procurement strategy but are not realizing or sustaining the expected benefits
- A complex merger or acquisition requires expert assistance to reduce the time to realize synergies
- Your suppliers have told you that no additional discounts are possible
- Your (strategic) “partners” ask for incremental spending on their technology solutions without a clear and guaranteed ROI
Our seasoned professionals bring insights and perspectives that are objective, yet decisive and challenge conventional thinking. Our collaborative approach in developing category-specific strategies focuses on total cost of ownership, ensuring measurable and sustainable bottom-line results.
CONTACT US
Sourcing@SourcingAdvisorsGroup.com415.426.6744
TO SUBMIT RFPS
SourcingRFP@SourcingAdvisorsGroup.comWHY CHOOSE SAG?
Doing the impossibleOur clients frequently comment that we succeed where internal teams and other consultants have failed.
Solving complex problems is in our DNA
With 20+ years of resolving some of the most urgent challenges, we have honed critical expertise that clients can use to achieve rapid improvement.
Senior-level expertise and leadership
Our senior leaders, many of whom are former CPOs and business executives, have the experience and credibility to breakdown organizational roadblocks to drive positive change.
We put our fees at risk
We take ownership of the problem and willingly put our fees at risk to demonstrate our level of confidence and commitment.
CORE SERVICES
There has never been a greater need for a high performing procurement organization Commodity volatility, technological innovation, evolving regulations, globalization and increasingly interdependent supply markets have led to unprecedented complexity and pressure on businesses of every kind. In this environment, procurement organizations are challenged to transform beyond a traditional cost cutting function to a strategic business partner that manages supply and pricing risk, enables innovation and drives bottom-line results. Few organizations are prepared for this radical shift
Spend
Analytics
Fewer than 25% of firms have full and accurate view into their spend profile. Yet, it is impossible to maximize sourcing results without insights generated from current spend profile.
We work with clients to extract data from all spend data repositories (ERPs, travel systems, pCard systems, among others) which our team consolidates in a non-production system. The data is ‘cleansed’, normalized and enhanced. 98%+ of the Spend dollars are categorized to sourcing spend categories, and dashboards are developed for stakeholders.
Data Cleansing & Enhancement
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Spend Categorization
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Dashboard Development
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‘Single Source of Truth’
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System Development
Vendor Contract Analysis
Contracts are an essential component of spend data detailing contractual rights and obligations for both the buyer and the supplier. Master Services Agreement (MSA), Statements of Work (SOWs), Addendums, Amendments, among others are critical to the evaluation of the sourcing opportunities.
We gather contractual data, de-duplicate documents, inventory documents, and create a dashboard of key terms & conditions including key dates such as termination, automatic extension notification deadlines, termination for convenience rights, KPIs & SLAs, scope and pricing terms.
Contract File Consolidation
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Key T&C Extraction
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Document Inventory & Summary
Opportunity Assessment
Data is worthless unless firms extract value from insights enabled by the data.
Opportunity Assessment includes a “quick” spend analytics and vendor contract analysis (if full analysis is not available), in conjunction with our expertise to estimate the cost reduction & value creation opportunity.
In addition to spend category level cost reduction opportunity, additional metrics are defined including time-to-value, sourcing complexity, relative buy-in of key stakeholders, perceived risk to the business, among others.
Pre-Deal Due Diligence
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Draft Spend Categorization
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Preliminary Cost Reduction Estimate for Each Spend Category
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Project Definition & Time-to-Value
Sourcing Roadmap
Recognizing that Business Units ‘own’ the spend, procurement must engage each business owners with recommendations for value creation based on the developed data-driven insights, the working plan, and the requested commitment.
Sourcing Roadmap develops a ‘sales’-like document for each stakeholder with the objective of clear goal-alignment and clear expectations about next steps. The discussion focused on procurement’s recommendations that are derived from data-driven insights, yet flexible enough to accommodate stakeholder needs.
Stakeholder Alignment
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Category Sourcing Prioritization
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Program Plan
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M&A Performance Improvement and Playbooks
Category Planning
Too often, Category Plans are just generic templates devoid of any meaningful insight or opportunity identification. Not surprisingly, many teams fail to win collaboration with Business Units stakeholders (their customers) as they struggle to identify meaningful insights and value creating proposals.
We believe Category Planning is the intersection of insights extracted from company’s spend data and the required category management approach based on sourcing experience. Our plans are grounded in data-driven insights, sub-category and/or vendor-centric approach based on expertise and tactical know-how.
Spend Category Plan
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Stakeholder Engagement
& Buy-In
Supplier Risk Management
Surveys show that at least 50% firms lack visibility into their Tier 1 suppliers and less than 10% have any visibility into Tier 2+ supplier base. As a result, this opacity renders supplier risk management next to impossible.
Studies show that firms average 500 – 1,000 suppliers per $1 billion in revenue. This is an unmanageable operating burden that opens firms to substantial risks, beyond excess costs.
Our approach begins with identifying key suppliers needed to address business scope and objectives. Applying best-practices, we consolidate supplier relationships while expanding engagement with preferred suppliers.
Strategic Supplier Collaboration
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Third Party Risk Management
Category Sourcing
Most procurement teams source individual vendors, and often, only a portion of their Tier 1 supplier in-scope volume. We believe this approach is inefficient, ineffective and a cause of frustration for procurement and business unit staff and leadership alike.
Our focus is on sourcing each spend category over multi-year period. This in concert with tactics including right-spec’ing, KPI and SLA development, volumetric transparency, true price & terms transparency, among others generates results that are 3x – 5x better than norm.
Organizational Design and Skills Enhancement
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Process Improvement
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Technology Review
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Synergy Planning and Capture
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Integration/Carve-out Planning and Execution Support
Performance Management
Optimizing vendor spend and developing strong contractual relationships with suppliers is only the first step.
Proactive and frequent (e.g. monthly and quarterly) assessment of spend performance and supplier relationship is essential with both Business Units and Suppliers. This includes reporting, compliance assessment, gap identification, corrective action and remediation efforts, among other activities.
We focus on ensuring that the value identified during Category Sourcing is fully realized, and ongoing benefits are captured.
Reporting and Dashboard Management
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Process Improvement
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Technology Review
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Contract Management & Compliance
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Demand Management
>20%
EBITDA improvement
>40%
Productivity gain
>50%
Time-to-market improvement
$100 million IT Spend
Financial Services Firm
$50 million 3PL Spend
IT Technology Firm
$3 billion Enterprise Spend
Financial Services Firm
$600 million Enterprise Spend
Regional Airline
$400 million Direct Spend
Global Electronics Manufacturer
$10 million Event Spend
IT Technology Firm
Restructured & optimized performance of a $10+ million outsourcing provider
Software / SaaS Firm