Most Improved Purchasing Operation Step Change 30th January Tim Carrier Head of Procurement
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1 Most Improved Purchasing Operation Step Change 30th January 2013 Tim Carrier Head of Procurement
2 About Capita From 1984 to the present day Building the business including a sales pipeline of over 4bn 2 People 8m t/o 98 Staff 25m t/o 320 Staff 11 Sites 453m t/o 7,500 Staff 115 Sites 1,081m t/o 23,000 Staff 200+ Sites 2,073m t/o 30,000 Staff 260 Sites 2,774m t/o 37,000 Staff 300 Sites 2,930m t/o 46,500 Staff 350+ Sites Company formed within CIPFA Capita launched from management buyout Full listing on LSE FTSE 100 Capita named 'Best BPO Provider 2004 Awarded largest ever contract with Prudential Major new contracts and extensions Total value: 795m Creating growth organically and through acquisition Internal 2
3 The Background Historically, Capita s central procurement team (Group Procurement) had limited influence on the company s global third party expenditure of 865m per annum. With 92 Operating companies over 3 continents and over 350 site the starting point was: 18 acquisitions in 2010 followed by a further 24 in % of spend was controlled and managed on a local level, with Group Group Procurement only responsible for company-wide indirect contracts. Lack of visibility or control of the amount being spent on services from third party suppliers. The large and ever-expanding breadth of Capita s services means that a proportion of the external expenditure on services can, in fact, be kept within the Group. In June 2011, following numerous acquisitions, the Capita Operating Board decided to consolidate its procurement teams to drive incremental cost benefits. And with the ultimate aim of controlling all expenditure over 100K.
4 Procurement Transformation to re-organise and optimise processes, to gain financial control through engagement across the businesses, and ultimately to drive incremental bottom line profit. Key Objectives. Develop a new governance model allowing budget removal of cost savings Build an effective, flexible procurement organisation for Capita Group Deliver sustainable benefits for the Group via leverage and innovation Develop an optimised and sustainable supply chain Deploy best in class technology and intelligence to drive efficiency Develop procurement policies to minimise risk, drive control and compliance Lead the delivery and control of driving expenditure within the Group Provide benchmarking to enhance the competitiveness of our businesses Up-skill Capita staff in relation to Group contracts and procurement skills Deliver an improved service to all stakeholders internally and externally.
5 Planning & Execution...a true bottom line impact of over 5% of the company s profits could be achieved
6 Innovation & Creativity New Operating Model - The Embedded Procurement model gives the team all the tools they need to provide the individual business units operational delivery teams with the required expertise to deliver best value procurement solutions.
7 Innovation & Creativity Capita First Agenda Through senior stakeholder engagement, benefits analysis and the new business partner model, Group Procurement was able to influence and migrate spend from external 3rd party suppliers to our own internal providers. Help Desk By developing and implementing a centralised Help Desk solution, Group Procurement now provides support to internal users, producing how to buy guides, offering operational support to internal stakeholders and answering external supplier queries. Green Dashboard Capita implemented a Supplier Portal a highly scalable and affordable online responsible sourcing solution, which enables suppliers and Procurement to track and monitor environmental factors, carbon emissions, labour, health & safety and bribery and corruption information.
8 Best Practice ProMPT2 - A Procurement Methodology has been developed to ensure consistency of approach, which includes a suite of tools and templates on a centralised SharePoint site. Intelligence Tools and Benchmarking The newly created Market Analysis function creates a foundation for building a strategic procurement capability that provides the insight and innovation necessary for effective decision making and for challenging third party expenditure. P2P Previously the majority of the procurement processing was manual the bulk of Capita s businesses used purchase order pads and then manually input the information into SAP on receipt of the suppliers incoming invoices. eprocurement Suite The existing eprocurement capability was upgraded during Q4, to a fully integrated web enabled system which includes the following best practice tools: Spend Analytics; Online Project and Benefits Tracker; Contracts Database; Supplier Portal; esourcing
9 Best Practice Our People - To harness the true potential of our Group Procurement team, a capability framework for continuous improvement and support was created to ensure alignment with the organisation s changing needs our Alongside methodology. Supplier Relationship Management The principles of Group Procurement s Supplier Relationship Management strategy ensure the sustainable supply of goods and services: Have regular supplier financial risk assessments and performance reviews Deliver according to the requested specifications Deliver in the correct timeframes Deliver products and services with high quality standards Provide us with competitive prices Operate in line with the company Responsible Sourcing Policy.
10 Achievements Implemented new governance model and procedures including monthly savings review to ensure 20m+ savings have been delivered to the bottom line. Drove 10m+ expenditure via Capita First (retained spend) Supplier Relationship Management Improvement innovation workshops with top 50 suppliers Developed and rolled out automated P2P solution across the Group (500+ users) Drove compliance to above 95% on existing Capita contracts Implemented a new Help Desk and technology platform to aid end user experience and drive channel shift to self service sources, freeing up scarce strategic procurement resource to focus on savings delivery Reduced risk across Capita, by moving 2,000+ contracts to the online contracts database Recovered 3m (with the aim of realising c 10m by end 2012) through profit recovery and bill audit processes Fully implemented 20+ acquisitions 3rd party spend and procurement organisations Delivered 2m of benefit by benchmarking several internal policies
11 Achievements Judges Comments Strategically improved procurement in every aspect. Clear tangible benefits were achieved with a wide mix of elements considered best practice CIPS Judging Panel, Supply Management Awards 2012
12 Testimonials Group Board As a provider of customer service and corporate support services, our clients rely upon Capita to achieve levels of efficiency, quality and service that they are unable to achieve themselves. We do this by being agile, horizon scanning and driving innovation into our solutions using the latest techniques to achieve stepchange performance on their behalf. Group Procurement ensures that Capita s Supply Chain comprises the right balance of stability and flexibility to ensure our customer value proposition is as compelling as our clients need it to be. Paul Pindar, Chief Executive Officer Group Procurement has transformed procurement performance from driving the business out of the rear view mirror to one where we now have a map, route and senior level understanding of what is required to get there. With clarity of understanding about the business case that underpins each procurement initiative, it becomes a much easier business decision to support and more importantly, one which allows us to proactively engage and sell to key stakeholders internally to achieve buy-in. Gordon Hurst, Group Finance Director
13 Testimonials - Suppliers "Over the past 12 months, there has been a clear and tangible change in the way in which the Capita Group Procurement team have worked with myself and my colleagues. Not only have the professionals and management within the Capita Procurement function taken a leadership role in all of the key business engagements with me and my extended team, but they have shown the highest level of integrity, professionalism and clarity in their dealings with us while maintaining complete ownership of the procurement process. Rob Sanderson, Client Executive IBM "Telefonica O2 has seen a significant change in the approach and influence of the Capita Procurement team over the past 12 months. Previously Capita maintained a silo approach across their business units resulting in numerous contracts in place for the same service with o2 and no central management. Since the implementation of the revised Procurement Structure we have managed to tie all separate contracts in to one, therefore allowing Capita to leverage all their spend and all business units to realise the benefits. Nick Hill, Key Account Manager
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