Global energy products and services company plugs into outsourcing for new procurement and sourcing capabilities

Situation:

The $20 billion company was looking for an outside procurement solution-a centralized buying center with the power to adjust to changes in procurement volumes, provide additional services to users, and incorporate proven procurement and sourcing processes. The group would manage 13 subcategories, including contract labor, facilities, utilities, engineering services, MRO, software services, software and support, IT, and communications.

Solution:

The global giant plugged into ICG Commerce to establish an outsourced buying center that would be fully responsible for purchase-order creation and management, resolution of invoice discrepancies, online reverse auctions, and indirect-category sourcing. Throughout the transition, the company and ICG Commerce aligned indirect sourcing processes across categories while simultaneously standardizing all global procedures. Personnel were trained across commodities to increase knowledge and flexibility for increasing or decreasing order volumes, enabling ICG Commerce to reduce the required buying resources by 50% within the first 2 months.

The new buying center is located at an ICG Commerce facility that provides access to its sourcing and category experts while at the same time offering full access to IT, network, and phone systems-all making the changes transparent to the end-user.

Results:

The customer's costs were "variablized", making the indirect buying function no longer based on fixed costs of resources and overhead but on the volume flowing through the system. Based on projected volume, costs are being reduced 40% by partnering with ICG Commerce. And that's restoring a lot of energy back into the global company.