Proof it works

Hear it from our clients

The Catalytic Approach with Proxima delivers benefits in many areas that conventional procurement simply doesn’t reach or ever consider.

We’ve helped our clients deal with a forced change in their business model; aided post-acquisition integration; unified fragmented operations; improved customer service; improved effectiveness in the supply chain; and even found value in the auditor relationship.

Below are some examples of what our Catalytic Approach can achieve.

Proof it works

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From Dotted Line to Bottom Line

This is a pen

Dotted line to bottom line

It’s a vital tool for one of our clients, because their success is strongly based on written communications that educate their customers about the quality of their product – something which sets them apart from the rest of the market. We worked with this client to improve the effectiveness of their entire marketing strategy – an area that conventional procurement often doesn’t go near. Moreover, the idea was not to cut costs, but to improve quality and results. In fact the budget went up. But so did the effectiveness and profits – comfortably justifying our role. How did we do it?

Back to that pen. Our strong and up-to-date knowledge of the field meant we were able to show our clients that the contracts they were signing were not nearly as favourable as they thought. We were quickly able to eliminate several risks, not least raising agency liability levels by a factor of 20, and ensuring watertight intellectual property rights on all materials. These solved the first of several problems about which our client had not even been aware.

Our Catalytic Approach led us to sit the client, the marketing function, the procurement function and the media agency around a table. We helped better define roles and responsibilities, helped develop a more cohesive long-term strategic plan, and integrated the agency as part of the planning and thinking by sharing this process with them. Targets, aims and briefings were all aligned to business targets. With clear direction and better communication all round, the agency was galvanized and motivated, and able to contribute knowledge insights and ideas of its own.

Next we introduced ‘econometric modelling’ to measure the effectiveness of media placed, and then used this to predict the effectiveness of future spend in terms of increase in sales per pound spent on media advertising. The model gets better and better over time as it learns more and more about previous media. It gets increasingly accurate in terms of predicting media effectiveness. Naturally it was quickly able to show that our work had paid off: our client has made sales ahead of forecasts on the launch of new product ranges, and now makes a return on investment on their media spend way above what they ever experienced in the past.

For the competition, the writing was on the wall.

Imagine this level of thinking applied right across your business.

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Tender Loving Care

This is a tender document

Tender document

To be exact it is a rival tender document to that of the current auditors for one of the world’s largest corporations - a Big Four audit firm who has been doing the job for our client for over two decades. But unlike many such documents, this one’s existence is not solely to pass lip service and come an “honourable second”. No, this tender document is in it to win. 

Audit is an area fraught with complications. Firstly, many of the people charged with purchasing it have, understandably, limited knowledge. Given tenders only go out every 5-10 years it’s a highly specialised subject. Secondly, creating competition is extremely hard, since the Big Four audit firms cover so much of all the professional services bought in by blue chip companies. The whole system encourages complacency and limits change, as the existence of some relationships of over 100 years can testify. What, then, can Proxima and Catalytic Thinking do to change this?

We understand that deep down this is not really about running a tender – it’s about taking the care to understand complex business issues and deep relationships, in order to ensure the right business outcome is achieved... all the time bearing in mind the ultimate goal of the satisfaction of shareholders that their investment is being well managed, and that risk is being carefully controlled. Audit, like any area of business, needs to be motivated in order to perform.

  • We know how to ensure that a market is ‘made’. We know what strategies to employ to engage with the Big Four to encourage them to submit a bid for an audit tender and put the necessary time and effort into submitting a well-considered bid with the full intention of winning
  • To ensure they have a real chance of winning, we provide the prospective audit firms with a “level playing field” i.e. the knowledge and insight they need, give them access to the right people to demonstrate commitment, and provide answers to their questions 
  • We place a lot of importance on ensuring the views of the audit committee are well understood and communicated – classic Catalytic Thinking – at the same time as helping to educate the audit chair around our experiences in the audit market: what to expect, how to react, and what not to do
  • As well as doing the necessary groundwork to understand the competitive landscape in terms of what services each of the audit firms are providing to direct competitors, we also research non-audit work to understand which firms competitors use for tax services, bid defence valuation, litigation support, and so on

The result of this particular tender? A rethink of the scope and the activities undertaken in the audit that led to a change of auditor. Proxima has since worked closely with the successful audit firm to support its exit from providing advisory services to our client. This is one of several major blue-chip audit tenders we have helped oversee, providing CEOs, CFOs and COOs with refreshing and dynamic alternatives to a tired status quo – something we offer them in all areas of their business.

Imagine this level of thinking applied right across your business.

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Proxima to the Rescue

This is a speedometer

Hear it from our clients

It comes from one of a range of special-need rescue vehicles manufactured by one of our clients. Unfortunately, partly due to some old-fashioned approaches to procurement, these vehicles were in something of a jam. Due to stand-offs with suppliers they weren’t even making it onto the road. Our client had a cash-flow problem, and was taking too long to pay. Suppliers responded by not supplying. Unfinished vehicles waited on the assembly line for parts to arrive. No one was going anywhere.

Could a more Catalytic Approach help? We encouraged our client to take a completely different, non-confrontational approach to their suppliers, starting with an important revelation that they had been reluctant to make: they had a full two-year order book. Sharing this, and clarifying the role of the suppliers in their vision for the future, released the blockage. When the suppliers understood the bigger picture they were able to secure credit to continue to serve the business. This unlocked the supply chain and parts were able to flow: vehicle production time tumbled. The ambulances (and the business) were moving in the right direction again.

Imagine this level of thinking applied right across your business.

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Seeing the light

This is a light bulb

Hear it from our clients

By switching it on, both literally and metaphorically, Proxima was able to reveal vast areas of untapped potential in the Maintenance, Repairs and Operations (MRO) area of a large manufacturer. We helped this client see problems – and several opportunities – where previously they had been in the dark. In effect, Catalytic Thinking provided MRO with some serious MRO of its own. But how?

The problems were firstly that the multiple manufacturing plants each used different suppliers, and didn’t communicate with each other. That meant inefficiency – suppliers bought new, expensive parts when the business already held them elsewhere, for example. And good practice remained isolated – it never went company wide because no one talked. Secondly came the matter of the stock management system – or lack of it. Stock managers were the only ones who knew what stock was where – and that was from memory. This was clearly a high-risk practice. Furthermore there were other issues here: masses of inventory, but not well recorded; a large amount of old and out of date stock; no tracing of what parts correlated to what; and… here’s where the light bulb comes in… several poorly-lit stockrooms including one with no light at all. Far from ideal.

As in so many areas, the Catalytic Approach was to bring the manufacturing plants together, and unite them with their suppliers, combining our insight and knowledge of how other organisations manage their MRO with a careful commercial evaluation of our client’s needs. This led to the following measures:

  • We developed a programme which classified all stock into one of: business-critical (to be available within 1 hour); MRO needed within 4 hours; or non-critical stock (needed next day)
  • We introduced some local suppliers who were able to fulfil the business critical needs
  • We arranged for one of the suppliers to put in place a stock management system free of charge, which all the other suppliers utilised
  • We helped identify and remove old and slow-moving stock to increase space in the manufacturing plants
  • We generated cash by getting suppliers to buy back excess stock
  • We generated £0.75m in assets by reclassifying stock written off in year one
  • We introduced a programme to enable the sharing of parts between sites
  • And, of course, we improved lighting and tidied stock rooms to make stock easy to find

The result was a saving of £0.8m on an annual spend of £7.5m, a lowering of risk and a reduction in down times through better processes. Our work with this client has now moved into its second phase, as we consider the use of OEM over manufactured spares, amongst other things. That’s the great thing about the Catalytic Approach, it’s not just about the short term. The bright ideas just keep coming.

Imagine this level of thinking applied right across your business.

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The Switched-on Approach

Take a simple retail refrigerator

Hear it from our clients

What can procurement tell you about it? How they negotiated a good price. But that’s all they can tell you. They wouldn’t have a clue about what happens when you plug it in. They don’t care how it is used. Or what it needs to achieve in-store for a national retailer.

They don’t see that the supplier could meet business needs and save them far more by talking instead of negotiating. About innovation. About improving maintenance, lowering downtimes, extending lifespans, lighting...

And could procurement be the catalyst for a simple change like moving the thermometer in order to save a fortune in electricity? No it could not.

The Catalytic Approach with Proxima is… excuse the pun… rather cool in comparison.

We applied this level of thinking right across a major retail business, and have delivered hundreds of millions to their bottom line to date.

They like the switched on approach.

Imagine this level of thinking applied right across your business.

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Greater Nutritional Value

This is a ready-meal

Proof it works

It forms a key part of one of our clients’ offering. Conventional procurement tendered these meals without truly looking at the circumstances around which they were supplied, or the real business needs they were supposed to be addressing. Our challenge: take it further. Reduce cost, increase quality and increase service.

Our Catalytic Approach engaged the caterers themselves, and looked to help them with their own supply chain, which is where we identified the opportunities for improvement. We reduced the frozen food suppliers from five to one. We actually tasted the food, which was tested exhaustively by professional tasters to improve quality. We improved service by doubling the number of meal types, and set up a system whereby client feedback could be collected (the scores went up). We worked with suppliers to devise menus that were locally sourced, cutting back on logistics. These measures boosted profits by a seven-figure sum.

A further seven-figure sum was saved annually because we also identified a cause of waste through misuse of technology. By demonstrating how demand forecasting could be made more accurate we ensured that the majority of the food went into mouths instead of bins. None of this required beating a supplier up over price.

Imagine this level of thinking applied right across your business.

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Made to Measure

This is a name badge

Hear it from our clients

It belongs to one of the uniforms that a client of ours uses for its global operations. Conventional procurement would argue it had done rather well in negotiating a good price on the item. It had 37 years’ worth in stock.

Proxima, having researched and understood the broader picture, could show that this was less of a saving and more like a great way to tie money up unnecessarily, and almost certainly waste it. Our Catalytic Approach quickly demonstrated how the problem went far wider than a single item, revealing how the standard tendering and negotiation of uniforms completely failed to address the real business needs behind the uniforms and their administration, something which had important repercussions in many different areas of the organisation.

When the business needs became clear our work quickly developed on several fronts. By changing from historical to forecasted data we aided suppliers, improved relations and cut costs. We changed working practice over the ordering of new uniforms, saving time and money. We addressed re-stocking policy, reducing waste by changing behaviour – like abolishing the policy of always holding maximum stock and replacing it with faster turn-around times and better logistics. We ran open days to help suppliers learn our client’s business, improving service. This is merely a selection. 

Our Catalytic Approach, bringing supplier and client together in this way, delivered seven-figure financial benefits and improved operations immeasurably, transforming the customer and brand experience, reducing risk and increasing innovation. None of this involved looking at the price paid per unit for uniforms. Now not only do those uniforms fit employees better – not always the case before – but they’re perfectly tailored to our client’s corporate objectives.

Imagine this level of thinking applied right across your business.

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The £15M Book Deal

This is a booklet

Proof it works

Conventional procurement would look at finding the best print deal for its manufacture. But in the case of our client, this wouldn’t see or solve the real problem, which was that in terms of business needs in the real world, the product was not performing as it should. It took Proxima’s Catalytic Approach to reveal this.

Our client is a global organisation covering a large number of operating companies acting autonomously. Each were buying their own print for a number of subtly different versions of the same booklet – as much as eight or nine for some. The booklets were printed in low volumes – exponentially more expensive – then went into a warehouse until they were drawn down. Typically only one version was ever called down in any volume. So vast numbers sat in storage. Then after three years, they were junked.

Working business-wide across departments, we convinced our client to make two major changes. By centralising print buying to a small roster we saved £5m. Then we convinced the business to introduce the rule that no booklet could have more than one version, without the CFO’s sign off. This ‘simple’ change involved very complex and careful change management. But it saved our client a further £15m. That was impressive.  But even more impressive was that it didn’t involve negotiating with a single supplier.

Imagine this level of thinking applied right across your business.

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The £1m Pick-up

This is a forklift truck

Proof it works

It is one of 1,800 mechanical handling equipment (MHE) units – covering 800 models, 11 suppliers and over 350 sites right across Europe – belonging to our client following acquisitions. All the units had differing conditions, contracts and practices across sites. Conventional procurement would either work with the individual sites, or simply leave well alone. Proxima, however, took the Catalytic Approach to help address the much bigger problem of how to start reaping the benefits of acting as a single entity.

Proxima’s solution was to harness the capability and site presence of the existing suppliers, and use a ‘carrot’ of securing future business as leverage. 

We set-up a Europe-wide steering group to give the project momentum and deal with logjams. Next, we identified which of the 11 existing suppliers would be able to service the real business needs.  Six were assessed as being potential candidates.  We then carved up responsibility for site audits across these six – on the understanding that each would have the opportunity to tender for the group business.  The plan was to have a master vendor agreement, whereby one of the six would take the principal position and service the sites they were able to, and the remaining sites would be serviced by the other five under the same contract – acting as sub-contractors to the principal supplier. 

All the existing stock was sold and leased back to our client. This provided a large one-off cash benefit to the business. The leasing, maintenance and training that went with the equipment was dramatically streamlined, together with significant administrative benefits. A saving greater than £1m was delivered on the ‘total cost of ownership’ of £8m. That gave our client quite a lift.

Imagine this level of thinking applied right across your business.

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The Genie in a Bottle

Take a simple bottle

Hear it from our clients

Our mission, for a large beverage manufacturer: negotiate a contract for the manufacture and supply of the bottle on time at a great price. Job done, right?

Wrong.

We took the Catalytic Approach. We looked beyond the contract itself to the entire context of what this bottle achieves for our client.

We brought people together from all over the business. We contacted existing and potential suppliers. And then we got people to talk. What if we stacked one pallet higher? Shared forecasting information? Wrapped the crates differently? What if there was a way to take weight out of the bottle?

This Catalytic Thinking reduced production times. It reduced the level of raw materials. It reduced logistics costs. It reduced the impact on the environment. It improved the working relationship between supplier and client, improving terms and creating an on-going source of innovation. As well as providing a significant increase in profits (over £0.3m on a spend of £2.5m), it had a considerable impact on performance.

Imagine this level of thinking applied right across your business.

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Hear it from others

McKinsey & Company

It pays to be the best

Hear it from others | McKinsey & company

Two McKinsey & Company purchasing and operations experts, partner Jeff Shulman and associate partner Jahanzeb Noor researched supplier collaboration.

They found that “companies with advanced collaboration capabilities tend to outperform their peers in both top and bottom line performance. Leaders in supplier collaboration beat industry trends by ~2x in growth metrics.”

Learn more about their findings here

Deloitte

Rules for success

Hear it from others | Deloitte

Michael E Raynor, a director in Eminence, Deloitte Services LP, and Mumtaz Ahmed, principal, Deloitte Consulting LLP and chief strategy officer, Deloitte LLP studied “hard financial information” on more than 25,000 companies spanning almost half a century. Of those, they identified 344 as “exceptional”… but what they wanted to know was why? What made them great companies?

The result of their research gave rise to a book “The Three Rules: How Exceptional Companies Think”, published by Portfolio Penguin. The rules?

  1. Better before cheaper – these companies compete on differentiators other than price
  2. Revenue before cost – the companies prioritise increasing revenues over reducing costs
  3. There are no other rules – change anything/ everything in order to abide by the first two rules

Proxima couldn’t agree more. ‘Cheaper’ and ‘cost’ are the pitfalls of a failing conventional procurement, and lead to mediocrity. ‘Better’ and ‘revenue growth’ are perfectly aligned with the principles of our Catalytic Approach, and lead to excellence.

Learn more here

The Hackett Group

The scale of the opportunity

Hear it from others | The Hackett Group

The Hackett Group's 'procurement benchmark database analysis' details how indirect spending varies by industry – and reveals just how sizeable that spend is – between 18% and 34% of revenue for top quartile £6bn companies, depending on the industry. More importantly they calculated potential savings, which ranged up to £100m.

In short, it’s what we’ve being saying all along - that many businesses are simply not aware of their level of indirect spend, and that the meaningful savings opportunities exist outside of an organisation with its suppliers.

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