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Supply Management Transformation ROI Model

When transforming supply management capabilities and activities, the goal is to maximize and often accelerate potential benefits while exceeding return on investment thresholds.  A transformation program may contain many different types of improvement initiatives including: sourcing specific categories, category and supplier management improvements, process/operational management changes, organization restructuring, training and technology upgrades. A comprehensive and analytical approach to developing the business case for transformation results in a plan that lays out to executives the investments that will be required and benefits to be achieved, as well as an action plan to drive value in the short term and build/sustain that value over time.

  • An overall transformation plan to help your business improve profitability
  • A financial baseline of the current and future environment under "business as usual." This becomes the basis for measuring impacts of the transformation program against proposed improvement initiatives
  • An enterprise-wide view of the business case for change giving value to the full range of positive impacts, investments and ongoing operating costs including those that are not easily measured in financial terms
  • A qualitative assessment of the fact base for transformation
  • A business risk assessment and mitigating strategies
  • A practical, robust, Excel-based analytical ROI model that quantifies the operational costs, investments and benefits of the transformation program and enables scenario analyses to test alternative strategies
  • Leading benchmarks for key business processes to measure the impact of potential transformation changes
  • Insight and understanding of the business drivers impacting supply management capabilities, processes, technology, organization and governance
  • Costs/benefits associated with:
    • Strategically sourcing major spend categories
      Upgrading supply management technology and tools
      Reengineering processes to improve efficiency and maximize compliance
      Managing transactions to minimize your operational costs and help you focus on core business
      Ensuring spend visibility and effective governance via real-time dashboards and key performance metrics
  • An Excel-based analytical ROI model that can be leveraged to measure and track transformation program results and identify future ongoing continuous improvement opportunities
  • Recognized global leader…we founded and continue to innovate strategic sourcing and supply management best practices
  • Unrivaled procurement results & experience, coupled with deep and broad cross-industry perspective
  • Innovative analytic solutions to solve complex, data driven problems combined with our in-depth understanding of industries, business functions and the use of advanced analytical techniques to drive realizable value.
  • Experience assisting leading companies with supply management transformation and driving results across complex, strategic, direct categories
  • Insight into increased supply management capability requirements to drive value beyond cost savings with flexibility to meet changing business needs
  • Proprietary databases enable the capability to leverage global leadership practices, tangible results, and benchmarks
MEDIA SECTOR
Our client, a preeminent Canadian broadcasting company, was looking to integrate its operations across multiple regions, requiring an assessment of potential opportunities and strategies.  Its primary goal was to build upon existing infrastructure, while making strategic improvements to increase overall efficiencies and compliance (compliance to process and contracts) while decreasing cycle times.

Leveraging A.T. Kearney’s Supply Management Transformation ROI model, we collected the key data inputs required to conduct the assessment and build a business case for change and transformation that would resonate with key executives.  The analysis included a review of current staffing models, technology investments and benefits achieved to date.  In addition, it included a review of potential enhancements to existing infrastructure, organizational changes, as well as major system upgrades.  Potential benefits from alternative investments were quantified via internal data, A.T. Kearney best practices and industry-leading benchmarks.  The result was a robust business model that could support decision making and scenario analyses, allowing our client to develop a Business Case to meet current financial targets.

After evaluating alternative strategies, we helped our client finalize the optimal business case and road map for transformation that aligned benefits with investment requirements, designing an initiative that would be self-funding over time.


INSURANCE SECTOR
Our client, a North American health insurance provider, was looking to radically upgrade and transform its procurement organization to ensure it aligned to and supported the aggressive growth targets for the business over the next 10 years.

Leveraging A.T. Kearney’s House of Purchasing and Supply Management benchmark assessment, we developed a baseline assessment of the organization’s current state.  Then, utilizing A.T. Kearney’s Supply Management ROI Transformation Model, we developed alternative improvement scenarios to achieve the organization’s objectives.  Each scenario was supported by a financial business model to outline the investment, benefits and timing associated with each.
 
The final deliverable for this engagement was an approved business case and roadmap for a 5-year supply management transformation effort, including organizational changes and investments, strategic sourcing, a new training curriculum and an improved Source-to-Pay technology backbone.

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