Enabling peak business performance through sourcing

Landscape

As one of the world’s top five retailers and with a presence in every US state, this company has thousands of stores serving millions of customers each week.

Challenge

The retailer had a large volume of stores across the US but no unifying commercial property strategy; there were thousands of suppliers, inconsistent service models, and increasing costs, all of which were significant when aggregated at a group level. This also meant that customers might receive a different experience from store to store.

New Property and Procurement leadership identified the possibility of running a business improvement initiative to identify needs and implement optimized supplier solutions that would create consistent approaches, quality standards, and lower costs.

The situation was complex, with an enormous amount of data to understand. The internal Procurement team had been unable to make any significant inroads. The sponsoring executive noted that external capacity and capability would be required, and asked Proxima to inject expertise and to accelerate the program.

Our Approach

Proxima deployed an experienced on-site delivery team to work alongside the client’s own central and field asset management teams. This team was enabled by our off-site operations center, offering Analytics, (RFx) Event Management, and Research teams that allowed the onsite team to access fast and insightful support.

Our specialists undertook a thorough review of each program stream, talking to stakeholders and collecting vast amounts of data that was cleansed and ordered by our analytics team. Thereafter, we used our external perspective and benchmarks to determine the appropriate service bundling, improvement opportunities, and vendor base.

Finally, we created a go-to-market strategy and Sourcing Program to systematically work through the bid packages for the required services in conjunction with the clients’ project and change team.

Outcomes and Deliverables

Proxima delivered the program on time and with c. $40m in run rate savings, representing >10% of expenditure. The program touched most aspects of store maintenance, giving client staff a fundamentally different proposition from the supply base and an ability to rethink their own contributions. Beyond savings, improvements included:

  • Significant reduction in suppliers and a focus on self-performers with accountability for store service. This raised quality and freed staff to focus on customer experience
  • Development of comprehensive maintenance programs to reduce/eliminate reactive maintenance calls and associated charges, and fixed pricing for reactive services where feasible
  • Improved contracts with collaboratively defined, standardized service levels, key performance indicators, and scopes of work including factoring of climate zones

Two years in, we have delivered further savings and supported the client on acquisition and synergy programs. Our work has provided the necessary foundation to quickly plug-in new locations and leverage scale to align and renegotiate the newly acquired sites.

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