To audit competition, assess results, study procurement process, and propose improvements. To provide recommendations on how to get a lower cost without a decrease in quality and increase in implementation time.
Major Russian food retailer. The company operates several retail chains, including ‘corner stores’, supermarkets, and hypermarkets. Over 5,000 stores in total.
Procurement function support
April 2015
In order to comply with the Russian Federation laws, the purchase of special scanners for the new excise label was required. IT-department initiated an open competition at a tender platform, received offers from potential suppliers, made a comparison and provided the decision to the tender committee. The tender committee head (CFO) was not sure that the solution recommended was in the interests of the company.
We conducted a tender audit by several parameters – completeness of information provided by the suppliers, timing of data provision, delivery terms, requirements to suppliers. We assessed the scanners’ manufacturers and suppliers’ market in Russia and China. We verified calculations in the comparative table based on tender results.
We found some violations in the tender procedure – there was no transparency, there was a conflict of interests and the competition was limited. We noticed that the IT-department did not calculate the Total Cost of Ownership. We showed that the company would spend a lot of money and would not get the service of the desired level. We provided the recommendations to finalize technical specs and the competition.
Upon recommendations, the tender committee requested that the procurement department would perform the follow-up.
Other achievements on the project:
Head of the retail company tender committee
“Despite the fact that the tender committees are formed from the departments’ personnel, it is rather difficult to assess procurement efficiency in complex technical projects due to the lack of expertise. Our colleagues from PrECA helped us to look at procurement from a different angle, asked the initiators and procurement department the right questions and save mlns of rubles.”
Skills
Insights in market, category and functional area
Procurement Methodology and Best Practices
IT tools
Business Process Consultant
“In our work, we often see that the companies compensate for the low competencies of procurement personnel by strict regulations and numerous levels of control, instead of working on the human potential development. However, in the long run, this approach does not work. If you want to have transparent procurement and prices in the market, then you will have to invest in the development of procurement function, or transfer procurement process to outsourcing."
Submit a request if your company faces similar issues. We will conduct express diagnostics of your process and tell you what can be improved with the help of outsourcing.
