How Fact-Based Negotiations Reduced Supply Costs by Over 10% 

An international welfare services group used analytics to better negotiate with suppliers and save 5 million

Industry

Health Care - Hospitality & Healthcare

Company size

8000+ employees

Headquarter

Oslo, Norway

A large, multinational Health Care Services group with $60 million in yearly external spend, over 3000 suppliers, and with multiple companies across 6 countries.

CUSTOMER SUCCESS STORY
10%

Savings Realized

Through fact-based negotiations with key suppliers

4.6M

Savings Identified

With huge savings potential through commercial levers

24X

Procurement ROI

In the initial few months with supplier renegotiations 

 

The Challenge

Our customer, a leading Health Care Services group, provides services in several European countries.

The key challenge for the company was that each business unit largely worked independently, and procurement did not exist as a separate function. Therefore, there were no clear mandates or objectives for it.

Consequently, procurement was not directly linked to the group's decision makers and thus, lacked strategy.

With data scattered across ~50 subsidiaries, multiple units, and regions, the company also needed to achieve visibility into its spend and consolidate data for analysis.

Factors like an increasing pressure on margins and untapped synergy potential across the group echoed the need to address external spend more strategically.

The Solution

To mark the beginning of more coordinated procurement for our customer, we evaluated the measures we believed were most important to facilitate both immediate gains and long-term success.

To ensure the firm achieve spend transparency and establish a factual basis for success in the future, we recommended the following measures:

  • Collect complete procurement data, clean, consolidate, harmonize, and import the data to Ignite
  • Developed dynamic dashboards in Ignite based on the categorization of data and supplier enrichment from third party sources​
  • Use dashboards to identify suppliers for negotiation and realize quick gains
  • Create a replicable negotiation strategy/process together with Ignite's customer success team
  • Establish long-term, win-win collaboration with selected suppliers to enhance quality and reduce costs
  • Prepare a mandate for procurement with targets linked to the firm's overall goals
  • Continuously track spend and KPIs on Ignite to measure performance

The Results

The firm's engagement with Ignite delivered a number of significant benefits:

  • Achieved ~10% of addressed spend savings through the first negotiations with four suppliers using a data-driven and standardized approach
  • Created significantly greater spend transparency and a more strategic approach to procurement
  • Identified ~5 million in further savings potential with commercial levers
  • Prioritized categories with the most considerable potential
  • Developed the infrastructure necessary to ensure identification of further opportunities/savings and improvements in the future

 

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