Value Based Sourcing

After a buy & build phase, the newly combined business had a significant procurement spend. With more than 1500 suppliers it was spread out quite substantially. Our customer wanted us to identify the combined procurement spend per category, agree with the business on a procurement strategy, prepare and deliver negotiations.

We started by creating a joint database for all procurement spend incl. the underlying drivers (# of cases, prices, etc.). In workshops with the business, we agreed on preferred suppliers and a desired outcome. We then prepared the negotiation documents and delivered the negotiations. We also implemented a scoring mechanism in the monitoring that allows our customer to constantly assess quality and prices of suppliers which triggers potential renegotiations.

The entire project took 3 months before we started with the implementation. Given the size of the suppliers negotiations took 6 months and we were able to reduce 95% of the supplier spend to 530 suppliers. The business accepted all suppliers that we renegotiated the contracts with.

We furthermore introduced a new data driven way of working that allows the procurement team to improve the procurement spend on an ongoing basis.