Procurement Advantage - Creating actionable insights

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PwC was engaged by the client to conduct a Spend Analysis to identify and understand all cost saving opportunities and improve their overall strategic procurement efforts to support future financial sustainability.  

Our role included:

• PwC’s Procurement Advantage platform rapidly analysed and quantified the client’s spend data and historical procurement by Product Categories
• Establishment and consolidation of a standardised spend categorisation that aligned spend with established management structures and governance frameworks
• Development of detailed category analysis and opportunity assessment to achieve savings across various Procurement Levers such as Total Cost Management, Supplier Management and Product Rationalisation.
• Visualising the key insights and potential benefits to be validated with Procurement Teams.
• Ongoing project management activities were run collaboratively with the client and included facilitating internal workshops, prompt timeline updates, status reporting, and the timely coordination of development and review of deliverables.

PwC was able to establish a multifaceted cost saving approach, tailored to the spend profile of each procurement spend category. An automated, operational dashboard delivers updated procurement spend analysis across spend categories.

Major Private Hospital Group

A major private hospital group was seeking to reduce its cost base whilst continuing to deliver a premium patient experience and attract leading clinicians. Procurement expenditure was ~ $1 billion across directs (prosthesis, medical equipment, medical consumables, clinical services) and indirects (e.g. facilities, utilities, ICT).

We adopted a six step approach to analyse the hospital groups spend, develop specific category strategies and develop a road map for implementation:

• Data Enrichment - Collect & cleanse 3 years’ spend data across 40+ hospitals
• Spend Classification - Categorise spend using PwC’s taxonomies and categorisation tools 
• Opportunity Identification - Leveraging our Procurement Lever methodology and PwC’s Procurement Advantage tool, we systematically analysed each category across a range of Sourcing Levers to identify and quantify opportunities.
• Sourcing strategy - we assessed their overarching strategy to sourcing and how best to leverage scale through their supply chain.
• Deep Dive Analysis - Performed targeted in depth analysis on a number of sub categories to identify quick wins.
• Recommendations - Produced a roadmap for identified savings and collaborated with key stakeholders to produce a high level project implementation plan

The Hospital Group was provided with category strategies for each major category group alongside a risk assessment and implementation plan. The Procurement diagnostic identified savings of between 5% - 8% realisable over a 3 year period. 

Procurement Optimisation for a Large Entertainment Services Company

The large entertainment company had highly complex procurement activity across several sites resulting in disparate purchasing decisions without a holistic view on product level spend. 

Approach

• Purchasing power and product/supplier visibility were limited leading to a suboptimal procurement function. 
  PwC’s Procurement Advantage tool was leveraged to harmonise product level procurement data across sites while distilling savings opportunities into an interactive dashboard :
• Purchase Order Data was consolidated and ingested to understand procurement at the most granular level.
• Product Taxonomy was refined to obtain high level insights and map similar product spend
• Spend Analysis and Savings Identification was completed once the data was prepped and taxonomy finalised. 
• The Procurement Advantage Dashboard produced a wide range of visualizations and recommendations to optimise the procurement process.

Outcome

• The optimisation uncovered various business  and operational benefits:
• Product price variations across sites were targeted and used to identify potential purchasing powers and cost reductions.
• Procurement visibility increased exponentially increasing negotiating power and potential savings.
• Time-series trends for prices became visible.
• Supplier rationalisation became possible.
• Spend categorisation became accurate and comprehensive.