FMCG Client – IT Procurement Support

  • Mark Elkington
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An FMCG client required specialist IT Procurement resource to support a mid-term re-negotiation process with a critical Software as a Service provider. They were able to realise a cost reduction in excess of £10m compared to the negotiation start position, a ‘best in class’ contract with improved SLAs, improved service credits and clearly documented processes and reporting. In addition, supplier relationship activities led by Barkers resulted in a 30% improvement in how both the client and the supplier rated their relationship.

The client utilises a Software as a Service (SaaS) in one of its key business processes to operate it effectively. They required specialist IT Procurement resource to work with their business process and IT SMEs and the supplier to meet two objectives:

  • A renegotiated ‘best in class’ contract 
  • An improved working relationship between the client and the supplier 

The contract needed to be renegotiated in the middle of a five year term. This resulted in a lack of commercial leverage that had to be addressed through enhanced vendor management techniques.

This work took place during the COVID-19 restrictions creating additional challenges as a result of not being able to meet the client stakeholders or the supplier face to face. All workshops and negotiations were run online. 

Barkers provided an experienced Senior Managing Consultant to deliver both objectives.

To deliver the ‘best in class’ contract, Barkers’ knowledge base of commercial contracts was used to baseline the existing contract establishing any areas of weakness or gaps. All contracts and variations were reviewed, and 105 individual recommendations made. Seven workstreams were established covering service definitions, development support, pricing and performance, reporting, security, exit support and disaster recovery. For each workstream, a series of workshops was held with the client’s technical and support SMEs to understand their requirements, which were then drafted into a revised contract. There was then a series of negotiations with the supplier to agree the new terms and revised commercial elements of the contract. 

To deliver the relationship improvements a 360 degree relationship questionnaire was issued to all client and supplier personnel who have regular contact with each other. This identified differences in perception between the client and the supplier and pin-pointed areas for improvement. Specific fixes were put in place for each improvement area and a regular monthly ‘litmus test’ of the relationship was put in place to track changes over time.

We are pleased to announce the following results:

  • A cost reduction in excess of £10m 
  • Improved and clearly defined performance and service SLAs 
  • More aggressive service credit regime to drive supplier performance 
  • Clearly documented processes
  • Defined reporting requirements underpinned by SLAs
  • Relationship rating scores improved from 5/10 to 8/10 

Barkers: FMCG Client – IT Procurement Support Case Study

Author: Mark Elkington
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