As an operational manager, my interaction with RSA’s
sourcing team is critical to achieving my business objectives. In other firms, this operational and sourcing relationship can be compared to the quote from Nasa astronaut Alan Shepard, who, when asked what he thought about as he sat waiting in the rocket for lift-off, said: “The fact that every part of this ship was built by the lowest bidder.”
Not so at RSA. Sourcing is viewed as a partnership between line operations, sourcing experts and the supplier. Our four-point model is as follows:
Engagement with the sourcing team starts with operational business plans. An understanding of the challenges enables supplier negotiations to be done in the correct context.
Operational and sourcing representatives conduct supplier evaluations in partnership. Success criteria are agreed upfront with the long-term impact to the business taking precedence over any short-term financial gain.
We have to negotiate hard, but there is no benefit to us in the long term from a supplier taking on a contract that does not make it money. We ensure an enduring partnership.
The partnership extends to the ongoing relationship management, where supplier relationship teams, operational teams and the supplier all participate on an equal footing to achieve more value for RSA and customers.
For example, we are currently working on a high-profile project that directly impacts on our customer experience, involves a change of suppliers, TUPE and multi-million pound savings. Our four-point plan has ensured its success:
Sourcing, my operational team and I worked together to look at the challenge to reduce supplier cost while also improving the service to customers.
All of the RFI, RFP and supplier selection processes were conducted between operations and sourcing, so we ended up with a supplier who has the full support of all stakeholders.
We have been diligent in understanding how the supplier will make money from the deal.
Our new supplier has started working with us to understand how we can take more benefits from the current cost base.
Successful supplier partnerships lead to successful business outcomes, so I would be confident to be sat at the top of an RSA-procured rocket.
Procurement and operations
Follow these dos and don’ts to ensure a successful partnership between suppliers and the operations team:
Ensure sourcing is involved
at the start of a project. It
will prevent you going up
blind alleys and support you in front of senior executives if it has been involved.
Ensure you can articulate a robust business case that both operations and sourcing buy into and understand. It is surprising how many projects fail because of a lack of clarity around the business outcome.
Don’t assume that you can devolve or delegate all the supplier decisions to
a sourcing department.
The operations viewpoint
is critical to the success of
any sourcing project, so you
will need to invest time and resources to ensure a successful outcome.
Don’t declare success
when the contract is
signed, as that’s when the hard work really begins. A successful, ongoing relationship requires a lot of work and compromise on both sides.
☛ Paul Howley is head of shared services,
UK operations, RSA Insurance
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