Strategic Procurement

The Business Challenge:

• In the course of implementing a business turn-around, DirectFocus identified that its customer had developed a highly fragmented approach to procurement
• Evidence of such fragmentation were established by identifying that:
• different prices were being paid for similar products across different procurement sights
• that the administration of procurement practices were not consolidated and involved many invoices and many transactions
• by concluding that through consolidation of procurement practices savings in the order of 5% could be achieved without requiring any major investment in new technology

Approach adopted:

Phase 1: Establishment of a strategic procurement project scope

• DirectFocus developed a draft project scope, including defining project objectives, milestones, activities and key deliverables. A project sponsor and a project manager were also identified
• Consultation was carried out with key stakeholders and key project design criteria were further identified. For example, the importance of retaining localised approaches to procurement was taken into account, so that regional towns maximised the benefits of cash injections into local communities
• Plans were put in place to standardise the administration of purchasing and the types of products purchased as well
• A clear project implementation framework was established to ensure an orderly transition from project scoping to project implementation phase

Phase 2: Implementation of the project

• All project stakeholders were provided clear activity and accountability frameworks
• Milestones were carefully monitored to ensure any major risks were adequately managed
• Deliverables were achieved on time and within budget
• No investment in new IT systems was required as this became a key obligation of successful tenderers

Outcomes to Customer:

• Diligent tracking of project outcomes to estimated budgets were monitored and the project delivered on all key outcomes
• Overall costs were reduced by $400,000 per annum
• Localised approaches to procurement were successfully retained, whilst at the same time delivering the benefits of centralised and wholesale prices
• Increased work productivity benefits were realised, as less resources were required for the administration of procurement activities