Sears and Wipro Engagement Profile Value Creation from Procurement Outsourcing - October, 2010
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Sears and Wipro Engagement Profile Value Creation from Procurement Outsourcing October, 2010
Introduction
The business case for procurement outsourcing (PO) may look attractive given that it addresses a
larger cost base in comparison to other BPO segments. Still, the market for PO services has not seen
as much traction compared to other areas such as FAO or HRO. Despite the challenges faced in
implementing a PO initiative, especially around savings realization, many buyers have created
significant value from such engagements. This is evidenced in the case of PO services provided by
Wipro to Sears
This document highlights the drivers, challenges, and benefits of outsourcing procurement for Sears.
It also provides details on the engagement scope, criteria for supplier selection, and solution
implemented by Wipro to achieve the business objectives
Apart from the traditional savings realized through PO, this engagement allowed Sears to achieve
continuous process improvements and transformation for its procurement function. It also paved the
way for future outsourcing programs on HR and F&A
The client engagement profile is based on executive interviews with Sears along with information
shared by Wipro
The full study released by Everest on value creation through PO is available at
www.everestresearchinstitute.com/Product/11295
2
Proprietary & Confidential. © 2010, Everest Global, Inc.Sears – Wipro PO outsourcing engagement
Background and contract summary
Buyer overview Scope of work
Revenues: US$44 billion (2009)
Industry: Retail Three-year contract originated in 2007
Countries of operation: North America
Outsourced processes include vendor
Background management, eSourcing Support (both
Client situation merchandize and non merchandize),
Wanted to set an example to encourage outsourcing of other Operational and Transactional purchasing,
functions Contract Management, Analytics, performance
Believed that if a difficult function such as procurement could management, and accounts payable
be outsourced, other functions could be encouraged to do the
same Outsourced category scope covers IT/telecom,
Key drivers for outsourcing marketing and sales, facilities, and operations
Generate ongoing cost benefits
Improve process effectiveness and efficiency Geographic scope includes North America
Transform the Source to Pay function
Create example for other functions to be outsourced Pricing structure is primarily performance
Vendor selection based and FTE-based
There was a competitive bidding process with multiple
suppliers
Wipro was selected based upon capabilities and for providing
the highest TCO benefits to Sears
“Procurement outsourcing was a pilot for us that paved the way for future programs on HR and F&A. Wipro’s
quality, innovation and flexibility driven approach helped demonstrate time to market capabilities. Over the
years, Procurement track has grown and we have realized savings through outsourcing as well as continuous
process improvements and transformation!”
– Deidra Merriwether, SVP Finance and Procurement, Sears
3
Proprietary & Confidential. © 2010, Everest Global, Inc.Sears – Wipro PO outsourcing engagement
Solution details
Sears business objective Wipro solution highlights
1 Generate ongoing cost Revamped the procurement organization, and moved eSourcing,
benefits through Contract Management, Operational, Concur support, Transactional
transformation initiatives processes offshore
Eliminated the need for help desk by better cataloging efforts
2 Improve process Wipro helped standardize processes, enabled continuous
effectiveness and monitoring of processes, reduced maverick spend, increased
efficiency compliance, and increased sourcing coverage , savings, thereby
improving the process efficiency and effectiveness
Process automation improved spend visibility, and eliminated non-
value adding steps
3 Create example for other Experience helped create framework to determine what to
functions to be outsourced outsource and how to outsource, with fast time-to-market
Learnt from the experience to create best practices to be followed
with other functions like finance and accounting, and human
resources
Key challenges faced
The initial goal of lift-and-shift was achieved in 42 days, demonstrating speed to market capabilities
of partnership
4
Proprietary & Confidential. © 2010, Everest Global, Inc.Sears – Wipro PO outsourcing engagement
Value delivered
Dimensions of
Everest’s Total Value Examples of value created in Sears –
Equation (TVE) Definition Wipro relationship
Able to create proof of concept that
Value created by helped larger F&A and HR
impacting business outsourcing engagements to take off
Strategic Key lessons learned
drivers or making long- Used learning to create best
impact
term investments for practices, outsourcing road map,
competitive advantage and learn from the Buyers need to drive
mistakes/successes the outsourcing
process, you cannot
throw processes across
Value derived by Process automation improved spend the wall and expect
Process/ aligning process visibility, and eliminated non-value results
business capabilities more adding steps, thereby leading to
impact closely with business improved process efficiency and Supplier and buyer
needs effectiveness employees should work
together as the same
team to drive
Direct bottom-line Achieved ongoing cost benefits from maximized benefits
Direct-cost savings generated by restructuring the procurement
impact exploiting process- organization and moving
specific inefficiencies transactional processes offshore
5
Proprietary & Confidential. © 2010, Everest Global, Inc.Everest Group leads clients from insight to action
Contact us for more information about our consulting, research, and industry resources.
Dallas (Corporate Headquarters) India
info@everestgrp.com india@everestgrp.com
info@everestresearchinstitute.com +91-124-496-1000
+1-214-451-3000 +91-124-496-1100
+1-214-451-3110
Australasia
New York
australia@everestgrp.com
info@everestgrp.com
+61-3-9509-3933
+1-646-805-4000
Canada UK Netherlands & Continental
canada@everestgrp.com unitedkingdom@everestgrp.com Europe
+1-416-865-2033 +44-870-770-0270 benelux@everestgrp.com
+31-20-301-2138
www.everestgrp.com | www.everestresearchinstitute.com
6
Proprietary & Confidential. © 2010, Everest Global, Inc.You can also read
