Sourcing and category management: A strategic approach to spend management

Challenge

Manage supplier performance, risk mitigation, and cash flow

As the impact of COVID-19 continues and inflationary pressures increase, many companies have had to keep costs and cash flow a top priority. In our work with clients across a variety of industries and regions, we typically see a core list of common challenges when trying to free up cash flow and manage costs:

• Inaccurate or incomplete spend data sources
• Diverse and siloed internal stakeholder groups
• Complex service-level requirements with suppliers
• Driving spend compliance to negotiated contracts
• A lack of current category market intelligence
• Macro-level economic inflationary pressures
• Constrained working capital

These challenges prevent organizations from reaching their full potential, overinflate costs, and cause unnecessary operational inefficiencies.

Solution

Comprehensive category management and strategic sourcing

There are three ways organizations can optimize external costs and maximize value from their procurement activities:

• Have full and up-to-date spend transparency
• Ensure appropriate allocation of resources to activities so strategic team members aren't distracted by tactical and administrative tasks
• Continuous improvement across the full spectrum of category management responsibilities

Genpact's category management and strategic sourcing teams are industry and category experts, with strong delivery experience in their domains. They've been handpicked for their prior performance in delivering significant cost savings and category management excellence.

Drawing on our teams' expertise, we take a holistic approach to running services and solutions for our clients. This includes:

• Annual category planning: Full category assessment that includes a review of contract expirations, benchmarking, demand management, and market trends. This creates a prioritized list of transformation and savings projects
• Strategic sourcing: Proactive execution of strategic sourcing projects, with strong internal stakeholder alignment to business goals and objectives
• Spend compliance management: A formal spend compliance management program to ensure the use of preferred suppliers, improved working capital, and maximized savings negotiated
• Supplier performance management: Management of supplier's contractual commitments performance to maximize savings and minimize risk
• Contract management: Monitoring and management of supplier contracts in a central repository for key milestones, KPIs, and SLAs
• Continuous improvement: A category management-led program that works with suppliers to identify and implement savings opportunities that reduce customer costs

You can leverage these offerings as part of a complete category management and strategic sourcing program or independently, as an extension of your team. Where needed, our teams are supported by our proprietary sourcing workbench platform – a curated set of best-in-class tools that automate the end-to-end sourcing and category management process.

We recognize that no one solution fits every client's needs. We start by assessing your organization's exact needs and work with you to develop a solution that accelerates your performance and exceeds your goals.

Impact

Increased compliance and significant year-over-year cost savings

Genpact runs end-to-end procurement activities – from category management and strategic sourcing services through to tactical procurement operations – for a multinational conglomerate. We were asked to consolidate the supply base, leverage global spend, implement controls for spend compliance, and reduce operating costs. With full category ownership of eight indirect categories of spend, we handle tactical and transactional activities across eight business units and 130 countries. In 2020, we delivered hundreds of millions of dollars of savings, exceeding our savings targets.