POST CONTRACT MANAGEMENT Unlocking the Potential. Mira Ristovich Senior Consultant: Group Procurement
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1 POST CONTRACT MANAGEMENT Unlocking the Potential Mira Ristovich Senior Consultant: Group Procurement CIPS Sothern Africa Pan African Conference May 2011
2 Agenda As MTN, we Business Growth Political risk map Procurement Helix Sourcing Methodology & Relationship Life Cycle L&D Vendor Rationalisation Background Pre-Contract: Planned Achievement Against Project Goals Sourcing: Vendor Filter Process Contract: From Purchasing...To Procurement Post Contract Management Relationships Savings Realisation Model Supplier Positioning for Sourcing Strategy Managing Critical Supplier Relationships Model Organisational benefits achieved 2009 Accenture. All rights reserved. 2
3 As MTN, we Connect people with family, friends and jobs Create jobs, directly in the operations with entrepreneurs who sell airtime, cleaning services, advertising services, office rentals, security services which generates the economic multiplier Create a positive atmosphere for other investments into the country Pay taxes which enable government to invest back into the communities with infrastructure development Create infrastructure where non exists (in place of rail, roads) Inspire the youth Invest in the communities in which we operate 2009 Accenture. All rights reserved. 3
4 Business Growth National Player African Player Emerging Market Player Operations Population 68m 344m 552m Market cap (ZAR bn) 58 (31 March 2000) 103 (31 Dec 2005) 253 (31 Dec 2010) Revenue (ZAR bn) EBITDA Subs(m) 2, ,7
5 Political risk map - High growth is in high risk markets 5
6 Procurement Helix 6
7 Sourcing Methodology & Relationship Life Cycle Sourcing Methodology Process Identify Opportunity Diagnostic Phase Solution Definition Contract Management Post Contract Management Relationship Life Cycle Model Seller s activities: Develop offering Advertise Create needs Condition Sell Buyer s activities: Buyer has need Specifies need Search Condition Business Case Development Approval by Technical Committee Cross Functional Team approval CFT defines the scope RFx issued Evaluation process (desktop, presentation, additional questions, price review) Short listed vendors identified High level plan Negotiate frame agreements with key suppliers to ensure better price and more efficiency Detailed agreement Implementation Initial delivery Refining Ongoing delivery Continuous improvement Business development Extension Completion Termination 7
8 L&D Vendor Rationalisation - Background MTN Group Learning and Development (L&D) aims to rationalise its learning vendor base to: Realise the potential savings opportunity Enable and sustain a rationalised learning vendor base and Improve the quality and consistency of learning delivered 8
9 Pre-Contract: Planned Achievement Against Project Goals The business case findings indicate that the rationalisation of L&D vendor management will lead to costs savings, a reduced vendor base and consolidated programme catalogue Goal Planned Result Rationalise the vendor base In the targeted competency clusters by 25 50% Achieve cost savings Between 7% and 20% in net nominal savings opportunity. MTN s strategic objective is to be a least cost operator Achieve economies of scale Negotiate price, screen the quality and content Standardisation of vendors per competency cluster Identify suppliers and rationalise supplier base Incorporate leading practices of sourcing of Learning Vendors into MTN Reduce administrative efforts In line with critical skills required Assess suppliers on full set of criteria, including capabilities, offerings, price and quality Remaining four sourcing steps to be used to realise the savings opportunities Standardise learning vendor management processes and improve integration between L&D, Procurement and Finance functions 9
10 Sourcing: Vendor Filter Process Supplier pool identified via internal and external research MTN Vendor External Vendors Total Screen 1 Minimal Requirements RFI information provides input to this process No. of vendors invited Screen 2 Value Add Shortlisted vendors from RFP process and selected priority vendors will proceed to the next sourcing event (auction/negotiation) No. of vendors responded Screen 3 Final Proposal Final vendor selection will be made to align with the project mandates of vendor rationalisation and cost savings No. of vendors shortlisted Final Agreement No. of vendors to be contracted Combination of RFP and RFI issued MTN incumbents and external vendors were sent the RFP s based on their capabilities 10
11 Contract: From Purchasing...To Procurement Contract Prioritisation and Assessment Contract Strategy Development Contract Plan Implementation Supplier Relationship Management Results Tracking and Reporting The earlier Procurement is involved in the sourcing process, the greater the savings achieved Operating Guidelines - MTN Procurement Programme Comparisons will be made based on total cost of ownership, including cost of switching and qualitative aspects Strategies will optimize group scale and align approaches to match individual business needs No group company will be worse off in the current environment than they were pre-strategy The Contract -Once potential suppliers, evaluation and risk criteria and implementation plans are defined by the operating companies, all sourcing decisions are to be honoured. Procurement Ambassador Mira Ristovich ristov_m@mtn.co.za
12
13 Savings Realisation Model Savings report will be compiled in LADDS and will be calculated in USD, Rands and Local Currency. Data Input Data Output Approved Vendors Approved Courses Prices per Vendor % of Savings LADDS monthly reporting Savings Report: Total Savings in USD Total Savings in Local Currency Total Savings in Rands Spend in vendors/courses not approved LADDS 2010 Accenture. All rights reserved. 13
14
15 Managing Supplier Relationships Model Supplier Performance Management 15
16 Organisational benefits achieved Robust approach Selective scope Benefits tracking Cross-functional teaming Change management Business case targets Well-exceeded the business case targets, with 26.82% (vs. 20%) savings 92% (vs. 50%) reduction in vendors for the in scope competency clusters The estimated number of attendees for the in-scope courses showed that MTN expected to train 49% more people than in the previous year The total training costs would actually reduce in real terms. The quality and consistency of courses being delivered has increased and stabilised respectively Accenture. All rights reserved. 16
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