Professionalization of procurement in the TMT industry

Value creation and spend optimization through centrally coordinated and holistic sourcing management

Our client is one of the world’s largest advertising holding companies consisting of a global network of advertising, communications and media agencies.

As part of a company-wide transformation, the procurement function was also put to the test. Due to a company growth strongly influenced by M&A activities, there was a lack of coordination between business units and regions as well as holistic, global strategies to increase the value contribution of procurement. Creative resources were tied up in inefficient activities and significant potential could not be leveraged.

There was global group procurement for indirect requirements, but no group-wide organized procurement for direct requirements. These were managed exclusively by the individual agencies.

Objective: Establishing procurement as a strategic key value driver

The focus of the joint project was on repositioning and increasing the efficiency of procurement. With our support, this department was to significantly reduce procurement costs, increase process efficiency and identify CO2-reducing measures to achieve the company’s Scope 3 Net Zero target.

In addition to immediately realizable opportunities, medium- and long-term measures were to be identified that would enable the client to generate maximum results.

Other objectives included the creation of direct spend concepts to unlock synergies, the digitization of processes, the enhancement of growth potential and the establishment of sustainability targets.

Approach: Identification and deployment of strategic value levers

As part of a global, holistic indirect spend potential analysis, our consultants reviewed all external spend, analyzed commodity groups and supplier structures, and performed comprehensive benchmarking analyses. In the next step, different value levers were defined for the potential identified and a detailed implementation plan was developed.

In parallel, quick-win initiatives were carried out to achieve immediate optimization of costs through commercial levers. These included reducing prices for facility services, bundling and product portfolio consolidation effects in the area of office materials, reducing costs for interior furnishings via benchmarking, and harmonizing commissions for recruiting services at a low level.

For Direct Spend, we conducted a 360-degree analysis consisting of spend scan, industry expert interviews, business stakeholder workshops and performance assessment. This revealed key potentials that enable the client to accelerate processes via coordinated procurement activities, free up creative resources on the stakeholder side, significantly reduce costs and leverage sustainability potentials.

It was shown that, in addition to significant cost reductions, the integration of group procurement in Direct Spend and proactive, centrally coordinated and digitized procurement can accelerate purchasing processes by over 50% and free up over 500,000 additional hours of work for operational processes and customer management.

As the company’s clients are increasingly looking at factors such as diversity, social responsibility and sustainability when selecting a media partner, we have demonstrated how procurement can push diversity on the supplier side and minimize CO2 Scope 3 emissions and contribute to business growth.

Detailed category strategies were also developed for important indirect spend categories in order to provide procurement not only with a long-term vision but also with a concrete roadmap that shows when which measures, in which sequence, create which value.

This laid the foundation for targeted consolidation, restructuring and digitization in Legal Services and the implementation of a CO2-minimizing IFM concept in the EMEA region. In addition, strategies were developed for cost optimization in the area of means of payment and insurance, the global bundling of office materials, the introduction of a digital platform for the management of temporal labor, and the implementation of sustainable mobility concepts.

Due to the limited resources available to procurement, we provided intensive support to the client every step of the way, which enabled us to enhance the reputation of procurement in the agency network and lay the foundation for expanding the team.

Results

  • Detailed global category strategies with clear vision
  • Concrete implementation plans (>300 global, regional and local measures)
  • Best practice concepts for strategic procurement development
  • Savings in the double-digit millions
  • Clear ideas and measures for significant scope 3 decarbonization and optimization of corporate social responsibility in procurement

Talk to our experts

Pieter Niehues

Principal

pieter.niehues@inverto.com Contact

Thibault Lecat

System Leader LAB&F & Managing Director

contact@inverto.com Contact

Our technology and media insights

Focus papers

Procurement operating model

With an increasing focus on costs, firms are taking a look on procurement function as a driver of value & innovation.