A health insurance company’s Finance team needed to make its annual budgeting process easier and more accurate for itself as well at the rest of the enterprise).

The team already was using Cost Drivers to perform Budgeting and Expense forecasting. However, some of the Cost Drivers were not related to the associated expense categories, and were being applied to both Fixed and Variable Costs, regardless of whether or not there was a clear relationship to the Cost Driver. Additionally, there were significant time constraints for the effort, as the following year’s budgeting process was fast approaching.

Taking an 80/20 approach to the problem, Serratus Management Consulting developed the solution approach and project plan, focusing the team on the most important Expense Areas, and reviewing the most important Cost Drivers and associated processes.

• Leveraged focused interviews, workshops, SIPOC and GL analyses to develop a new set of Cost Drivers that either augmented or supplanted the existing Cost Drivers.
• Developed a flexible Expense Guidance Model which leverages Cost Driver data in a more targeted manner.
• Provided recommendations for the client to extend the Expense Guidance Model and associated insights to create greater spending transparency and unearth new cost savings opportunities across the enterprise

A major credit card issuer was looking to streamline and reduce costs for its Direct Mail Marketing Function, an area with expenses in excess of $100 M per year. It had retained a management consulting firm to assist with attaining these goals.

A number of interpersonal conflicts within the consulting team began to affect the team’s performance adversely, hampering the vendor selection and negotiation processes, as well as the development of enabling technology.

Serratus Management Consulting was brought in to manage the project, and recommended a change in staff composition, and with a smaller team, completed the sourcing efforts, developed the cost estimation software tools, and ultimately helped the client realize >$60 million in run-rate savings.

A specialty pharmaceutical company had recently hired a new Chief Procurement Officer who wanted to perform a Procurement Opportunity Assessment to identify fertile areas for sourcing and demand management activities, and size the opportunities.

The company had its A/P data in a form which did not support sourcing activities, i.e., it could not roll up expenses and suppliers accurately into actual sourcing categories and sub-categories. Thus, it had a difficult time answering questions such as what do we buy, from whom, and how much, and furthermore, where can we save money?

Providing Project Management and subject matter expertise, Serratus Management Consulting led the development of a detailed Spend Cube to identify areas with the largest spend and potential savings magnitudes.

• Conducted workshops with the Category Managers to quantify savings opportunities in the short and longer terms, thus clarifying both priorities and constraints.
• Developed a plan for a Sourcing Wave spanning more than 15 spend categories with projected cost savings in excess of $25 million.

A major global pharmaceutical manufacturer wanted to move from a decentralized Capital Expense procurement model for its major production equipment to a centralized purchasing model which leverages the spending mass of the entire company and enables adherence to standards for this $600 M+ expense category. Additionally, the client believed that changing the nature of its relationships with strategic suppliers would yield additional benefits.

The client company was multi-divisional and multinational, with numerous LOBs in several dozen countries, and with countries purchasing equipment and outfitting their production lines with little coordination or standardization. The 10-person project team (plus SMEs) also reflected this complexity, as the Capital Equipment category spanned more than 15 sourcing subcategories.

Led the client team in defining the path of moving from disaggregated purchasing and point-in-time tendering to centralized Category and Sub-Category Management and Supplier Relationship Management (SRM).

• Developed the Supplier Relationship Management Best Practices guidebook to assist the client in envisioning the new function and organization.
• Collaborated to define the organizational structure and personnel required to enforce equipment standards and move the organization towards SRM for their strategic suppliers.
• Developed job descriptions for the new roles within the new organization
• Worked with the client to map Equipment Standardization and Purchasing processes and agree on new processes to support the new organizational goals.
• Developed procurement strategies for several subcategories.
• Assisted the client in prioritizing the equipment sub-categories in terms of Sourcing, SRM implementation and Standardization efforts.