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Case Study

Leveraging Sourcing with Organizational Growth

Comprehensive strategic sourcing program executed via managed services achieves long-term savings and organizational growth.

The Profile

Global organization that provides clinical services and medical devices for pharmaceutical and healthcare organizations.

The Objective

Elevate the maturity level of the procurement organization by developing bespoke, best-in-class, policies & processes, sourcing templates, and procurement/supplier scorecards. Analyze and categorize all spend. Strategically source all categories of spend to generate impactful savings, increase working capital and negotiate long term supplier agreements. Finally, document all projects for future reference.

The Challenge

The organization had a minimal, de-centralized procurement organization, and its involvement was mostly tactical and administrative. Their spend was very fragmented with a high degree of rogue buying, which resulted in limited top-level understanding of what was purchased and why. Aside from ERP financial systems, there were no procurement tools in place, nor was the organization taking advantages of potential global synergies. The lack of a formal contract management tool led to many missed termination dates and automatic renewals with price escalations. Most agreements were on suppliers’ paper and internally the organization had no established levels of signing authority. The organization did not have a clear path forward to grow the procurement organization. They were not seen as a value-add department within the organization. They were seen as another administrative hurdle to place purchase orders and approve invoices for suppliers. This left the organization open to supply chain, financial and legal risks that negatively impacted its ability to be competitive.

The Impact

Completed close to 80 sourcing projects, with nearly $50MM in total contract savings. On average, we achieved 25% savings across all spend categories. As a result of the strategic sourcing projects we executed, the client now has a better understanding of the requirements for these products and/or services leading to organizational growth.

By consolidating spend and establishing longer term agreements, risk was significantly reduced and the ability to control costs was greatly enhanced. 

Velocity enabled the client to fully understand their spend and helped expand the newly centralized procurement organization. In addition to the savings generated, we provided a 5-year roadmap, which included Source to Pay Technology, Organizational Design & Change Management, Policy and Process Redesign and a Procurement Toolbox for the client’s continued procurement transformation journey.

“Velocity Procurement supported us for over 2 years and helped us take our procurement organization to the next level. They effectively acted as our extended procurement department generating an enormous amount of savings, which freed up a lot of capital for our organization to grow.”