Direct Procurement

Direct Procurement spend is a significant component of Cost of Goods Sold (COGS), in excess of 30% of total costs for most infrastructure and manufacturing firms. Optimization of costs associated with “direct” materials and services, therefore, can have a significant impact on profitability and working capital management. In addition, improvements in the direct material management processes can positively influence availability of materials for production purposes and fulfillment of customer orders.

Genpact’s innovative Direct Procurement Services solution leverages the power of our scientific approach to improve our clients business outcomes for Total Cost of Ownership (TCO), materials availability, and working capital optimization. We keep your direct procurement organization agile via a full spectrum of services ranging from Procurement Strategy through Procurement Operations to Payables. Coupled with deep domain expertise and an experienced team of commodity managers, analysts, and buyers, our approach helps you intelligently manage your procurement processes.

The Power of Process

Smarter processes drive better business outcomes. By driving down TCO, reducing surplus inventory, increasing on-time receipt of supplier deliveries, and resolving payment issues faster, smarter processes can drive transformational change in your direct spend.

Genpact is a world leader in business process and technology management services that deliver better business outcomes. Built on our 14-year heritage of Lean Six Sigma, our proprietary Smart Enterprise Processes(SEP^SM) framework uses a combination of more effective processes, detailed analytics, and targeted technologies to benchmark your processes against best-in-class. SEP provides domain-specific insights and best practices that drive greater effectiveness from end to end of the procurement process.

Our team of commodity managers works as an extension of your organization, bringing with them deep commodity knowledge in markets around the world. Our analysts have significant exposure to forecasting, demand management and spend analysis, and our buyer support associates specialize in handling transactional procurement activities.

This powerhouse combination of SEP^SM and deep expertise in the procurement domain significantly improves our clients’ ability to reduce cost and increase profitability, with further benefits to material management processes through reduction of surplus inventory, increased on-time receipt of supplier deliveries, and faster resolution of payables issues.

Services Designed for Greater Impact

Holistic services provide the crucial end-to-end, enterprise-wide view and handling of processes that is one of the differentiators of an intelligent enterprise. Genpact Direct Procurement Services span the procurement lifecycle from forecasting, demand planning, and purchase order management to supplier performance management and payables.

Forecasting, Demand Planning and Inventory Optimization:Focused on reduction of surplus inventories and potential raw material stock-out scenarios, these services also ensure adequate availability of raw material for the manufacturing processes.
Spend Analysis: We help identify opportunities for supplier rationalization, demand consolidation and improvement in contract compliance.
Purchase Order Management helps streamline the creation of purchase orders (POs), transmission and acknowledgement of POs by suppliers, and updates to existing POs.
Fulfillment ensures on-time supplier deliveries and enables expediting or delaying supplier deliveries to align with increases or decreases in product demand.
Supplier Performance Management establishes a structured review process of supplier deliveries, quality of material supplied, status of issues and compliance to procurement policies.
Payables processes ensure that suppliers are paid on time, issues are satisfactorily resolved within a reasonable timeframe, and the client’s working capital goals are met.

Genpact manages around $2B of direct procurement spend per annum for clients. The direct procurement practice is supported by over 500 associates and serves clients in the Aviation, Energy, Healthcare, Oil & Gas and Chemicals industries.

Proven Processes, Proven Results

End-to-End Direct Spend Management

$2.8MM in cost savings (~2%) achieved for direct spend of $150MM for an energy equipment manufacturer. Direct materials and services were procured from 11 countries across Asia, Europe and the Americas
$0.5MM cost savings (~7%) achieved on $7MM direct spend for a transportation equipment manufacturer through spend analysis, price negotiations and supplier performance management

Forecasting and Inventory Management:

$29MM of working capital impact for an Aviation engine manufacturer through 48% raw material inventory reduction and 41% inventory turns improvement
$5MM impact for a Security Systems player through improvement in forecast accuracy and service levels (material availability) for raw materials

Order Fulfillment:

50% improvement in supplier on-time delivery for an Oil & Gas equipment manufacturer through application of Lean framework
• 10% on-time delivery improvement for a Healthcare equipment manufacturer by reducing cycle timefor supplier order fulfillment

Procurement Policy Compliance:

$900K in excess supplier payments recovered by reengineering the supplier performance management process for an Aviation engine manufacturer
$1.1MM in supplier discounts applied by leveraging analytics for Accounts Payable and improving paid-on-time performance to 99% for an Energy equipment manufacturer