Start-up group procurement department dramatically exceeds expectations and objectives
When the London Stock Exchange Group (LSEG) launched its first annual procurement satisfaction survey of stakeholders, the results were startlingly positive. Nine out of 10 said that procurement had delivered above or in line with expectations, while procurement team members scored 100% satisfaction rating based on the expertise they demonstrated. The team’s success in building stakeholder relationships had delivered group savings of £14m, an 1100% return on investment. Not bad for a new team.
Just six months earlier, in June 2014, the situation for the £1.7bn-turnover group was very different. Procurement was done by individual business units, supported only by limited, finance-led procedures and systems. It was clear the company needed to invest in – and develop – a group procurement policy.
Anne Hurley, head of group procurement, led a new team tasked with meeting ambitious goals within a tight deadline. By the end of 2014,
group-wide third-party spend needed to be leveraged to deliver synergy savings of £6.5m.
Procurement also had to create a group contracts database with 50% of contracts by spend value, to identify and manage sourcing opportunities. The return on investment for the procurement function was set at 300%. So how did the team not only meet this remit but also more than triple its ROI target?
First, they initiated a group-wide analysis of purchasing- and payables-related data, resulting in a consolidated group-spend tool. They then tackled the challenges of inconsistent purchasing, finance systems and data sets across the group. In October 2014, they published the LSEG Supplier Code of Conduct to outline the behaviours and ethics expected of companies it did business with – and which they expected to apply in their supply chains.
The team’s success was due to talent and ingenuity, Hurley says. “This is a highly commercial and technically challenging organisation, with stakeholders skilled in supplier negotiation and management.
“Our experienced procurement professionals have partnered with the business to prove that we have a compelling value proposition, delivering outstanding return on investment and positive client feedback. By quickly moving up the value chain, procurement is now engaged right at the heart of the business.”
The first step to success was an intense, rigorous recruitment process that created a team of experienced and talented procurement professionals. The procurement function was careful to establish a good working relationship with the finance team so it could create a savings methodology and approval framework to be applied to all procurement initiatives.
After six months, the team achieved an overall score of 95% in the annual Employee Engagement Survey.