Our specialist retailer client had made significant investments in their customer proposition and was moving to diversify offerings to bolster revenue growth further. The onset of COVID-19 reduced footfall, overall revenue and hit net margin performance. In order to return to strong operating profit performance by the end of FY20/21 while continuing to invest in the brand, more scrutiny was needed on the £150m indirect procurement costs.
Approach
Proxima deployed a team to review all indirect spend to ensure value for money of supply and to subsequently optimize commercial agreements with suppliers. Senior consulting resource was aligned to review the existing approach to procurement, identify gaps in best practice, and provide recommendations on a new operating model to improve commercial delivery, visibility, and control.
Proxima also embedded leadership support to help with the engagement of senior stakeholders, identify the current and future needs of the procurement function, and lead the in-house team while a CPO was recruited.
Results
Proxima implemented new governance processes and procedures so that each project was signed off by finance and key stakeholders at inception. So benefits could be accurately calculated and tracked once it was completed. Results include:
- Cost savings representing a 4.5 x ROI against total fees
- Delivered 35 projects across multiple category areas
- Strengthened collaboration between procurement and the wider stakeholder community
- Next year, procurement activity plan to deliver incremental benefits
- Improved contract coverage with suppliers, utilizing new governance processes implemented through the program
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