By Susan Avery
It’s no secret that world-class companies sometimes work with consultants to transform procurement or take the function to the next level. Many are successful at partnering with these firms; together they deliver value in cost savings and other benefits to the organization. But, what happens once the engagement is over?
Looking for a positive response to this question, Bill Mangen, Vice President, Strategic Sourcing, Procurement and Supplier Diversity at Cox Communications, and member of the My Purchasing Center Editorial Advisory Board, began building a Center of Excellence within sourcing in January 2015.
He and his team had been working with consultants at Accenture for about six years, creating a strategic sourcing and procurement team that quickly surpassed its goals and objectives, especially those for cost savings. For these achievements, Cox Communications received the Excellence in Purchasing Indirect Categories Team Award in 2014, and Mangen, the 2015 EPIC Career Award in 2015.
To keep the momentum of the success with Accenture going, Mangen envisioned a Center of Excellence team, responsible for developing and executing standard processes that enable sourcing and procurement to be quick and flexible in its support of internal stakeholders, and provide sourcing managers with the tools they need to implement strategy and build supplier relationships.
“The Center of Excellence is part of Bill’s strategic vision for sourcing and procurement at Cox Communications,” says Jacob Riherd, Executive Director, Strategic Sourcing and Procurement, and leader of the Center of Excellence team.
“I know we can knock it out of the park and drive our sourcing department to best in class, and, at the same time, achieve strategic objectives Cox as a company is working on, such as our Go All Digital initiative which requires us to put devices in all our customers’ homes,” he says. “What can we do in sourcing to make that more efficient and effective? If we source faster, can we get a better deal or improve leadtimes that can go toward the company achieving its objectives faster?”
A Customer Service Attitude
To manage the Center of Excellence team, Mangen recruited Julie Moran, Senior Manager, Sourcing Operations, who has worked at Cox for six years. Her experience includes roles with increasing responsibility on the indirect procurement team, most recently as a category manager. She took on the new role in January.
Moran’s job managing the Center of Excellence team is to implement new tools the company purchased from GEP and to recruit for new operational roles, the individuals who will provide RFX management, contract management and pipeline support/demand management services to sourcing. Moran reports to Riherd, who oversees other services provided by the Center of Excellence: service level management, savings integration management and analytics.
An engineer with an MBA, Riherd, too, is a veteran of the sourcing and procurement team at Cox Communications. Experienced at analytics and supplier relationship management and managing the company’s third-party labor spend, he assumed his new post in May.
Riherd sees the Center of Excellence team as filling gaps left by the departing Accenture team: project management—ensuring sourcing events are executed promptly and that communications are flowing properly—and analytics support, as well as the actual running of RFPs and back-end value tracking.
“Sourcing can do this more effectively through standardized tools and templates,” Riherd tells My Purchasing Center. “What we’re going for with the Center of Excellence is a customer service-focused team.”
That said, Riherd and Moran agree on qualifications they seek in those they select to work on the Center of Excellence team: an understanding of sourcing, analytic skills, experience at project management—and a customer service attitude.
A True Partnership
In the early years of its transformation, sourcing at Cox Communications was responsible for providing analytics and support to the Accenture consultants who led the company’s sourcing events. In time, the sourcing team trained to become strong negotiators and the roles reversed, with the consultants eventually taking their leave at the end of the summer. Now the sourcing team—which numbers 25 and is still growing—has the Center of Excellence team to provide them what they need to do their job.
To do that, the Center of Excellence team uses several modules of the procurement platform SMART by GEP: contract management, e-sourcing, spend management, vendor management and project management. Moran is responsible for implementing the modules, coordinating training and loading data onto the platform.
“Ultimately, my team is going to help the sourcing managers so they can focus on developing relationships with stakeholders and negotiating with suppliers,” Moran says. “My team can do the analytics, run the RFPs and provide summary reports. This will streamline processes and create a one-stop shop for many of the repositories we had been using.”
She recalls a recent project. The team had a time-constrained RFP; the client had very little flexibility on a start date. “The team’s ability to quickly analyze the situation and execute, we were able to implement the project without any delays.”
A key factor, she says, was the e-sourcing module. “We were able to both distribute and collect all the RFP information while minimizing any communication issues with the participating vendors. Having an e-sourcing platform also limited our proposal delivery complications, such as issues arising from proposal file sizes. The Center of Excellence team was able to facilitate a smooth, precise and expedited RFP by harnessing the GEP system.”
The team also has the contract management module up and running—all the company’s contracts should be loaded into the system by the end of the year. That module feeds data on expiring contracts into a pipeline and demand management system, a service the Center of Excellence provides that Riherd calls “a differentiator.”
More than Savings
In managing the company’s pipeline of projects, the team is working to become involved as early as possible. They set up monthly or quarterly meetings with sourcing’s biggest internal customers, some of the company’s senior vice presidents and vice presidents. At the meetings, they discuss the status of current projects and recent accomplishments along with projects coming down the pipe.
“We talk about the strategy of the deal and what our team needs to make the sourcing event successful,” Riherd says. “The meetings have been helpful. We’ve been able to align timelines and complete projects on deadline.”
In the first four months, the team got involved in 25 projects that previously it might not have known about or learned of when it was too late to have much impact. “Getting engaged early is bringing us some good will and some good influence,” Moran says. “We are setting the table and issuing invitations to these meetings.”
At the same time, Mangen and his team have created service level agreements (SLA), or guidelines, to help set appropriate expectations for sourcing and its internal customers.
The SLAs help internal customers better understand sourcing's role, Riherd says, recalling some internal customers who create multi-million dollar project plans that allow just weeks for sourcing. “You can’t put in two weeks for sourcing and expect everything to happen to negotiate a $30 million deal. It’s not how things work. Just identifying the requirements may take six months.”
Defining the SLAs was a massive undertaking—aligning groups within sourcing to agree on the benchmarks. The Center of Excellence team is using GEP’s project management module to track the SLAs it began sharing through its monthly and quarterly meetings with stakeholders at the end of June.
The SLAs are simple. Riherd explains: With different spend categories, stakeholders and lines of business, there are five classifications for SLA targets, with a couple of rider policies, such as if the company doesn’t have a master agreement in place, sourcing will add 30 days because it will take time to put an agreement in place or if a stakeholder has already awarded a supplier business will add another 30 days because sourcing has little leverage in the discussion.
Working together, sourcing and its internal customers are fine tuning the SLAs—for instance, the CFO and CTO asked them to speed things up a bit, from some of the initial targets.
“Creating the SLAs encouraged sourcing to look at our processes and see how we can become more efficient so that we achieve what we committed to the organization,” Riherd says. “The Center of Excellence plays into this, helping to facilitate the process in keeping sourcing managers free to do what they do best, which is identify suppliers, maintain supplier relationships and handle the negotiation and contracting pieces. Then we can support and provide what they need to accomplish these things. It’s very much a partnership, with different skill sets that can be optimized in the process.”
Another service the Center of Excellence team provides is savings integration management, which the sourcing team has been involved with for the past four years. Centralizing this service, Riherd says, helps sourcing with consistency and credibility.
“The CFO has driven us to pull dollars we save out of stakeholder budgets and roll them into an overarching savings target,” he says of the service. To date, sourcing has helped the company save more than $500 million.
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Susan Avery is Editor-in-Chief at My Purchasing Center. She writes articles, blogs and white papers and manages and creates other content for the online procurement and supply management publication. She produces and moderates roundtable discussions, podcasts, webcasts and video interviews. Susan has 30 years experience covering procurement and supply management for Purchasing magazine and Purchasing.com.
George E. Krauter
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