A national charity's expenses had come to the forefront when a significant amount of government funding had been withdrawn. Cost reduction had became a strategic priority overnight.
Reasons for change
The purchasing process (7,000 invoices per year) was largely manual. Budget holders (within authority limits) could purchase whatever, from whomever and whenever they liked. Finance was in the role of paying invoices and unable to monitor, optimise nor control spending.
What was needed
With an organisational imperative to reduce overall costs, an independent review of the procurement function was needed:
Identify procurement business drivers and an efficient procurement operating model
Quantify the likely benefits of any procurement technology solution
Develop a business case for change
Select an appropriate procurement management technology
How we helped
We undertook a complete review of purchasing activity, volumes, controls and key metrics. We analysed the end-to-end purchasing process, management reporting needs and accounting functions. We developed a business case and facilitated the software selection of a purchasing solution.
Productivity. We identified process improvements that would deliver at least $84,000 per year.
Business Case. The organisation was able to confidently invest in the right procurement solution to support its purchasing objectives.
Cost Reduction. The CFO now had a solid basis to reduce, manage and monitor more than $20m of expenses per year across 100 budget holders. The organisation has since been able to save hundreds of thousands of dollars in wasted expenditure through greater cost visibility, supplier discounts and greater cost accountability.
Saved thousands by moving to an automated purchasing process.
Procurement is often seen as a poor cousin when most expenditure is for labour costs. A large charitable organisation was able to redesign its entire purchasing function.