Faced with increasing budgetary pressures, the largest school district in California was challenged to find opportunities for cost reductions within its Maintenance, Repair and Operations (MRO) division. A Prokür Group consultant was engaged to conduct a spend assessment and make recommendations for a strategic sourcing initiative.

Complication

• Poor Data - The MRO category was assessed to be $350M in annual spend. The level and quality of data was poor and required significant analysis to be able to generate insights.
• Conflicting Budgetary Incentives - There were approximately 11 known budget categories such as General Funds, Restricted Funds, Bonds, Grants, etc. Each of these categories had restrictions that did not always align with project objectives. For example, although you may save on a cost per unit for a $1M Grant, the Grant compelled the district to spend $1M. Value was realized, but no dollar savings would be recognized. Additionally, given the deadline to spend funds, the incentives to be less frugal in order to exhaust the funds before they expired could be high.
• Managing all of these restrictions and incentives added a unique complexity to the engagement.

Approach & Solution

• The Prokür Group consultant built a spend cube with all available data. The status of the data required significant cleansing and categorization. An early version of AI-based tool was used by what is now one of the leading providers of AI-based Procurement data analytics.
• Additionally, recommendations were made to improve negotiating power by capturing pass-through spend; We also recommended to shift the focus from supplier operational measurements (eg requiring 20% inventory on-hand) to value-based SLA's (eg 99% On-Time Delivery) to drive out costs and improve service levels.
• Our efforts uncovered $114M of addressable spend identified across four categories. With our recommendations to save an estimated $8.0M (7%) to $12.6M (11%) year over year.

Our client was facing a myriad of disparate and unconnected tactical initiatives that were necessary to improve business and supplier performance.  The Prokür Group (TPG) was hired to facilitate the execution of these initiatives.  After conducting our assessment, TPG recommended a realignment of the initiatives into two coherent, strategic programs that would launch a new line of business and restructure the Service Center supply chain.

Complication

• 12 projects identified by the client were siloed and lacked direction and structure, putting each at risk of failure.  An end-to-end operational vision was necessary to bring the projects together under a common strategy.
• The shear number of initiatives created a complexity issue that threatened the successful realization of their expected benefits.
• The multi-year timeframe of the original charter would have had severe customer experience impacts.

Approach & Solution

• The Prokür Group conducted an assessment of the 12 projects demonstrating their linkage and alignment to two global strategies: i) a Network Optimization initiative to streamline the US-based Service Center Supply Chain, and ii) the creation of a new product line of refurbished Oxygen Concentrators.
• TPG set out to align the initiatives under one program structure and team, gaining efficiencies and streamlining project management leading to clearer and more purposeful communications and change agendas.
• A network optimization analysis applied a unique optimization model to assess multiple scenario’s for plant consolidation.
• Discovered additional benefits from consolidating spend across fewer suppliers, improved service levels due to greater compliance, and enabled the implementation of SOP changes throughout the network more efficiently.
• Used the Strategic Sourcing process to create/implement a new supply chain within 6 months, strengthening requirements and avoiding severe customer service interruptions.
• Reduced the number of vendors from 36 to 18 and the number of service center locations by 20% while still maintaining a 98% service level.
• Saved the company over $1.4MM (42%) from price reductions.  Additional benefits from standardized operations improved SLA’s with liquidated damages.

In parallel to the Network Optimization initiative, TPG advanced the creation of a new product line for refurbished oxygen concentrators – identifying the market potential and developing the Business Case for the new product line.  Designed and created the operational Supply Chain, including recommendations on how to leverage the existing network to conduct operations.

• Benefits from the new product line would nearly double the year’s revenue growth (188%).

The Prokür Group (TPG) was tasked with advancing the stalled integration of the R&D Procurement function into the parent company of a recent multi-billion dollar pharmaceutical acquisition.  The integration included all organizational, operational and technical aspects of the procurement department, as well as the migration of the 3^rd party supply chain for Direct categories (CDMO’s, CRO’S, Laboratory, Translations, etc.) and Principal Investigators.

Complication

Urgency and expediency were necessary to make up for critical lost time.  Key functions such as the Global Clinical Development Operations (GCDO), Medical Affairs, Drug Safety and Regulatory were entirely dependent on the procurement organization to engage critical service providers.

The considerable operating and cultural differences across the organizations required training in entirely new ways of working while multi-year trials for rare-diseases had to continue without interruption or risk to operations.

Approach & Solution

Working within the governance structure of the IMO, TPG supported the migration of the R&D Procurement organization’s people, processes and technology with the following:

• Cross-functional coordination between Global Clinical Operations, Medical Affairs, Drug Safety, and Regulatory.
• Working with Finance, migrated over 826 Supplier Purchase Orders valued at $248MM for the above functions and 2,000 purchase orders for Principal Investigators from the Coupa Procure-to-Pay (P2P) instance into the Ariba P2P system.
• Led the communications and change workstream to identify audiences and provide the appropriate level of information and training.  Organized and conducted several company wide town halls, online seminars and targeted outreach to drive understanding and compliance.
• Supported training on the new P2P system as well as follow-on support to key stakeholders.

The entire effort resulted in the successful transition of all suppliers, purchase orders, processes and training of employees on their new roles and responsibilities.

An engineering design firm specializing in A/C repair parts for the automotive industry faced increased complexity as its product offerings grew from just a few to over 100.  Planning and operations were unable to keep up with the increased demand, capping their top-line growth.  The CEO brought in The Prokür Group to develop a solution and put the company back on track.

Complication

The Prokür Group assessment, which included the Value-Accelerator Workshop, discovered several complications:

• Poor Governance model and Performance Management system left the leadership team unable to affect key performance metrics like Inventory Accuracy and On-Time-Delivery.
• Production and Material Resource Planning tools were not designed for purpose, leading to inventory shortages and production stoppages.
• General lack of training and skilled labor for key functions such as Procurement and SI&OP.

Approach & Solution

• The Prokür Group developed a multi-pronged strategy to improve end-to-end operations and customer service levels.  An operational assessment was conducted, leveraging the Accelerator Workshop results and detailed process mapping was completed.
• An Interim VP of Operations was placed to drive and implement the strategy.
• A corporate-wide governance model restructured the operational team to achieve business goals and objectives and foster a culture of collaboration, accountability and problem solving.
• New processes streamlined and/or integrated included Order-to-Cash, SI&OP, Inventory Management.  An MRP was installed and the Warehouse was reconfigured to promote flow and minimize loss.
• The efforts by The Prokür Group resulted in: a 300% increase in production capacity; Improved on-time delivery (OTD) from 49% to 80%; Improved inventory accuracy from 40% to 80%, leading to record revenue growth in Q1 and Q2 of 2022; Reduced core product costs by 28% through strategic sourcing initiatives.