Managing supply of consumables for a chain of DIY hypermarkets

Task

To establish procurement process – from receipt of request until payment to the supplier. Eliminate the risks of blocking supplies of consumables by suppliers due to payment delay. Reduce and control the cost of procured materials.

Client

A chain of DIY construction hypermarkets with 15 stores in Russia.

Type of service

Operational procurement

Period

November 2013 - September 2014

Case

The company purchased supplies on a regular basis – packaging film, paper, household goods, office supplies. The materials were purchased from two primary and three reserve suppliers. From time to time, the process was disrupted due to the lack of a clear procedure for planning and placing requests. Initiators in stores ordered miscellaneous items at inflated prices. There were closing documents lacking for 10% of purchases, which led to an overpayment of taxes in the amount of 240 k rubles a year.

Materials were purchased from 2 main and 3 reserve suppliers
Supply disruptions occurred from time to time
The initiators purchased materials at inflated prices

The Process

1. Data collection and analysis

We conducted an audit of the current process of placing purchase requests. We collected information on payment terms from the contracts and signed supplementary agreements indicating contact persons and stipulating the process of placing purchase requests and handing over closing documents. We created a unified table with the contacts of the responsible employees of the client and the suppliers.

The procurement department needed a tool with a functional and simple interface.
After analyzing cloud solutions, we selected Scanmarket eSourcing.
CFO and Procurement Manager decided to go on with a pilot project.
2. Works performed

We developed a unified procedure for ordering consumables and household materials. We agreed on the purchase request form, which included the option of selecting the available range of goods and materials from the catalog. We defined the procurement scheme: the request is sent to the PrECA employee and then they place the orders to the suppliers. Price requests for the new materials were performed through Scanmarket.

Results

The process of placing orders was entrusted to PrECA and became totally under control.

 

Other achievements on the project:

  • No debt to suppliers and elimination of supply disruptions
  • Consolidated Reporting on achieved Savings
  • 5 suppliers: 2 primary and 3 reserve ones
  • Unified items list – 88 items
  • Prices fixed for 12 months

Savings – 20% against current prices or 4.5 mln rubles per year

Customer Feedback

CFO

“After the process of supplying our stores with consumable materials was transferred to PrECA specialists, the store directors were able to concentrate on sales. The outages due to late payments to suppliers was totally excluded. Reports provided by PrECA made it possible to control the budget on a monthly basis and prevent critical deviations"

Tools

Expertise of the market, category, and functional area

  • Knowledge of the specifics of the category “consumable materials”
  • Knowledge of the optimal supply management process

Procurement Methodology and Best Practices

  • Supply management methodology for consumable materials: principles, procedures, instructions
  • Request templates for end users, and management reports
  • Best practices applied in multinational companies

IT tools

  • Macros for big data processing and analyzing
  • Experience with ERP systems – SAP, ORACLE, 1C

Skills

  • Task management
  • Communication with stakeholders and suppliers
  • Data acquisition, structuring, and analysis
  • Standardization, unification, and optimization
  • Operational work – contracts, requests, orders, invoices

Project Stakeholders

Anatoliy Tsypkaikin

Project Manager

Anna Metseeva

Operational Procurement Specialist

Stakeholders about the Project

Anna Metseeva

Operational Procurement Specialist

“We have extensive experience in procurement outsourcing, which allows us to build and launch a standard P2P process quickly. This client was no exception. Within one month, we took over all activities related to the placement of purchase orders, claims work and payment control from the initiators.”

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