As one of the top 5 global pharmaceuticals companies, the client was under pressure to reduce costs across their entire indirect spend. It was evident that whilst some of the categories could be easily managed, the more complex areas of creative, print and marketing services provided a daunting challenge, but one that could not be ignored. The scale and complexity of the organisation meant that identifying the current spend was a significant problem. The various ERP systems in place across the enterprise simply didn’t provide the granularity required to assess potential spend. Each country and individual business units operated independently so common processes and suppliers bases did not exist.
Some parts of the organisation had already outsourced to managed services, several used expensive marketing agencies, others had internal but overstretched buying resource and several business units had no management of the category in place. So where to start?
Claritum’s Spend Analysis team were introduced to initially gain visibility of the largest of the business unit’s spend. This meant challenging an incumbent international print management company’s claimed savings and revealed significant potential further savings. Whilst the recommendation was to retain the print manager, systems were put in place to ensure the potential benefits were achieved. Where agencies were engaged, recommendations were made to de-couple creative and production services, which revealed major cost reduction opportunities with little or no impact on brand communications. For smaller operations, ‘lite’ spend reviews were conducted.
With the current spend identified, the solution the team proposed involved a process and supplier review followed by a blend of category specific e-procurement technology and a highly flexible resource team which combined the incumbent print manager, agency production teams and internal resources, where applicable.
Dependent on the starting point, savings ranged from 10% to 40% whilst maintaining a high level of satisfaction across the entire user community.
Claritum enabled the client to understand the depth and breadth of the opportunities for savings through reducing maverick and erratic buying, commoditising the spend without compromising the creative requirements and to begin the process of being able to leverage their buying. Our team and partners jointly helped the client assess the merits of outsourcing, controlling their creative agency spends and leveraging their overworked team of in-house buyers. Claritum’s sourcing platform was deployed on a company by company basis to ensure compliance to best practice and capture the spend to an even higher level of granularity than previously achieved.
Best Practice Sourcing Implemented
Claritum’s software was deployed across the EMEA region to the client business units, agencies and suppliers to provide a standard best-practice sourcing and procurement process.
Flexible Engagement Model
For the larger or more complex requirements the print manager provided expertise but for smaller spends users could access a centralised buying hub of experts. Agency production teams were provided the tools to source materials but were controlled through comprehensive range of permissions.
Over time the spend became more visible and increasingly commoditised through increasing use of Claritum’s Catalogue with resultant lower level of engagement of expensive specialists.