Utility provider leading the industry whilst generating 10% savings p.a.
Improving Procurement Operating Models to Drive Efficiency in Utility Transformation
Grosvenor partnered with a utility provider undergoing major transformation to review and redesign its procurement operating model. This involved undertaking detailed spend and inventory analysis, clarifying accountability across business units and identifying category management and market testing opportunities. As a result, these activities delivered significant cost savings and a clear implementation pathway for future improvements.
Situation
A utility provider was undergoing a significant transformation to become recognised as a leading utility. The procurement function had been identified as a priority candidate for review and transformation. The utility sought external expertise to conduct the review and identify a pathway for improvement.
Task
The delivery of procurement within the utility was a shared responsibility amongst differing business units. This resulted in blurred lines of responsibility and accountability for outcomes.
Additionally, a concurrent project was underway to improve facilities for the storage of the utilities’ inventory. As the review of the procurement function involved detailed spend, inventory and asset analysis, our client quickly required a clear outline of the future purchasing and inventory model. This was needed in order to inform the size, location and functional requirements of future storage facilities.
Grosvenor was therefore required to collaborate with multiple business units, undertake detailed spend and inventory analysis and produce recommendations for the future model. All of this was needed within extremely short timeframes.
Approach
Grosvenor pulled together a project team with specific expertise in procurement, category management and spend and inventory analysis, and commenced stakeholder consultations. We collected data on historical spend, and undertook detailed spend and inventory analysis. Furthermore, we also benchmarked the current state of procurement, including the current service delivery model, with better practices and like organisations.
Result
Grosvenor produced a detailed report on current inventory and spending across the utility. We identified opportunities for improvement, including through the implementation of a refined service delivery model. In addition, we found opportunities through broader market testing for goods and services and implementation of category management. We conservatively estimated the potential for future savings of 11% per annum.
We also provided the client with a practical implementation plan and guidance to support the rolling out of the changes across the utility.
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Start a conversation with Nicholas Leask, Procurement Lead