Optimising procurement at Styria Media Group
Reducing costs and increasing performance: How INVERTO is helping Styria to prepare for digitalisation
As one of the leading media companies in Austria, Croatia and Slovenia, Styria has more than 2,295 employees and turns over €314 million per year (2016). Alongside its portfolio of daily and weekly newspapers, magazines and publishing houses, radio stations and holdings in a TV broadcaster, Styria is also present in the digital sector, running news portals, marketplaces and content and community portals.
Media companies like Styria are currently facing a huge challenge. Increasing digitalisation and the changes resulting from it affect the media sector as much as any other. To make matters worse, a decline in advertising revenue and in print runs is exacerbating already intense cost pressure. To withstand this pressure, potential needs to be exploited by optimising external costs, before then reducing internal costs.
INVERTO was tasked with managing cost pressure and transforming decentralised demand fulfilment into a coordinated, communal procurement organisation. This involved tapping into existing procurement potential and supporting Styria in order to realise this potential. All necessary measures were defined with the sustainability of the results firmly in mind.
Firstly, a four-week potential analysis process was conducted in Austria and Croatia. Based on the results, a pilot was developed with four areas of focus: printing, shipping, IT services and IT hardware. The complex, interconnected company structure was a particular challenge, presenting weaknesses in procurement coordination, for example by having multiple contacts for similar requirements. On the other hand, a large number of ad hoc requirements was also noted.
The importance of actively involving employees became apparent over the course of the project. It was found that regularly demonstrating the savings achieved was a considerable motivator for the P2P project team.
After a successful pilot project, the follow-up phase focused on developing further potential, especially in the digital sector, i.e. both for the digital division and for general IT needs, as well as on organisational development and process coaching. The parties worked together to set up a virtual procurement organisation in order to define procurement guidelines and strategy, establish procurement controlling and set goals and KPIs for the Head of Procurement and lead buyers.
The project results show clear benefits for the company:
- Results directly improving EBIT in 2017
- Savings of more than €2 million (approx. 12.6%); 100% ramp-up in 2018
- Implementation of best practices and KPIs
- Established virtual procurement organisation for relevant main product groups
- Accompanying coaching resulted in a structured, smooth transition to the new procurement organisation with the aim of ensuring sustainability