Global hospitality group
Redesigning and reconnecting a global procurement organisation.
The situation
In late 2012, this global hotel group had a problem: procurement was failing. There was no strategy, innovation or connection to stakeholders. Demotivated staff were applying ineffective processes in pursuit of narrow, self-referential targets.
Analysis highlighted six major problem areas. Franchisees felt disengaged from group sourcing, damaging their sentiment and lowering return on investment. Procurement was dominated by US and UK teams – despite massive new businesses in Asia. The function itself was overwhelmed – and lacked category expertise thanks to the sheer scale of the operation. Worse, it was focused on narrowly defined cost savings, not broader corporate objectives. Little surprise, then, that the function had little visibility into contractor performance.
All of this created a vicious circle: lack of trust from stakeholders, which damaged procurement’s ability to influence behavior or even generate sustainable savings, further undermining their status in the organisation.
The solution
A critical project set out to revolutionise the hotel group’s procurement with four simple objectives: rebuild those stakeholder relationships; recruit a team with the right expertise; define and deliver a clear procurement strategy the whole organisation could align to; and streamline processes.
The touchstone for all these objectives was the group strategy document. Only by aligning the new procurement function around these top-level business goals could the Proxima team be sure that they would win buy-in at every level. A clear transformation plan, with a business scorecard built around stakeholder KPIs, was the playbook.
Building the right procurement team – which included hiring in the best of the existing contractors – was a breakthrough, allowing the project to deliver against five key themes. These were the challenges Proxima identified as having the biggest potential gains for the group – and the surest ability to win over the various stakeholders such as franchisees and country managers in the shortest time possible.
The result
Improved stakeholder engagement has now created a culture of value management across the group. That’s meant a 40% increase in the volume of orders processed through internal systems, yielding additional revenues for the group and better deals for managers and franchisees as they leverage group scale and expertize.
Planning has improved, too, and revamped spend data classifications have also allowed for much more accurate discussions around costs with stakeholders. The group’s leadership team also benefits from clearer, more meaningful reports. Procurement is now formally represented in that leadership team, too.
It’s a clear example of a business that assumed the supplier eco-system could be run on auto-pilot – when, in fact, addressing it with a fresh approach was the perfect way to revamp strategy, culture and corporate collectivism across a global entity.