Capability

Procurement

We help leading organizations transform procurement into a strong competitive advantage that delivers sustained value.

Oliver Wyman offers a unique blend of:

  • Sourcing expertise: category knowledge, best practices and methodologies.
  • Transformation capabilities: our capability to elevate and broaden the procurement topic and deliver skill transfer; talent management; culture, practices, and organizational change; and capability building.
  • Client enabling approaches: effective execution and sustainability, supported by leading-edge tools and methodologies, to build efficient operating models.
  • Guaranteed performance: capacity to enter innovative gain-sharing relationships.

Our dedicated team of 20 partners and 200+ experienced consultants and managers based in North America, Europe, and the Middle East is supported by the Sourcing Expertise Center. This network of experts provides in-depth category expertise and supplier market insight as well as methodologies and tools development support.

Key Player of Information & Technology, Recently Listed on the NYSE

In the context of its recent listing on the NYSE, our client needed to demonstrate operational excellence and fund a broad transformation program. Oliver Wyman engaged in a project to address the potential untapped value in external spend. We conducted a systematic review and challenge of the entire spend ($120 million) and identified a total of $15 million of savings available in under two years, through sourcing strategies revisions, specifications optimization, and consumption control. In the same time, we helped our client set up a perfectly functional procurement department (staffing, processes, KPIs, etc.) to deliver and sustain the value.

Major Retailer, Engaging in a Major Transformation

Our client, in a tense European retail market context, was looking for opportunities to support its ambitious fast growing countries development plan through cash & cost optimization. Oliver Wyman engaged in a large transformation project aiming at setting up and staffing a Goods Not For Resale worldwide organization while delivering purchasing performance savings to sustain the growth. An in-depth systematic review of the GNFR spend (€3.7 billion) has been performed collaboratively with clients’ teams (40+ spend categories, 70+ work teams) leading to the identification and the delivery of +€200 million three-year cost savings. In parallel, a systemic GNFR operating model has been established  including the creation of a savings tracking system and tool supported by the finance function.

Global Pharmaceutical Company, Facing a Significant Market Shift

Our client faced challenging market conditions (patents cliff, increasing development costs, change of reimbursement policies) and wanted to increase procurement contribution to the bottom line. We developed procurement strategies on categories ranging from COGS to Marketing and CROs (+$15 billion+ dollars spend) and organized deployment across business units and countries. Cross-functional teams were mobilized to investigate sourcing and prescription improvement options, resulting in average savings exceeding 9%. Procurement teams’ efficiency improved by 20%.

Leading Telecom Carrier in a Market Opening to Competition

Our client, a telecom operator, was under increasing financial pressure and facing growing operational complexity. A diagnostic identified a potential of €160 million on external spend optimization (Opex and Capex). A subsequent project aimed at boosting negotiation and supplier panel optimization and enforce collaborative processes between marketing and technical functions to address “demand management” levers. Leveraging tailored approaches on core strategic topics (such as TV content, VOD, and SVOD), the client exceeded its saving targets. In addition, the process to integrate saving in budgets was completely revamped to ensure full recognition of impact by the finance department and business units.

Major Chemical Companies, in the Context of an International Merger

When two major chemical players were merging, Oliver Wyman led a project to redesign the new group purchasing organization and identify three-year €250 million cost and €60 million cash synergies and to set-up a collaborative savings tracking process and tool between the business units and the finance department. After a mutual discovery phase, several workgroups were launched: They delivered the expected results, and designed the target organization in full compliance with social requirements linked to the merger context. In addition, Oliver Wyman helped establish both a group-wide performance tracking process and a sustainable process to identify further performance levers, enhancing the collaboration between the purchasing function and its internal clients.

European Automotive Manufacturer

Our client conducted a large-scale product cost reduction program for all models in series production by applying technical (product benchmarking, expert workshops, function analysis) and commercial (regression analysis, cost comparisons, comprehensive negotiation preparation) levers. Oliver Wyman supported the identification and realization of savings potential in module specific and cross-functional teams for interior and electronics components and realized savings of approximately €400 million (~9% savings on addressed spend).

Construction Equipment Manufacturer

Due to a restructuring situation, our client conducted a comprehensive purchasing initiative for its major purchased part (approximately 50% of purchasing spend) with the objective to reduce material costs, to reduce stock risks and to reduce delivery time. Oliver Wyman supported the client in developing a sourcing strategy, conducting a comprehensive Request for Quotation as well as in preparing and conducting negotiations. As a result, the client reduced stock risks by €6 million and shortened delivery times by four to five months by implementing a consignment stock. Additionally, savings of approximately 8% on total purchasing volume have been realized.

Procurement Our Thinking