A focus on purchasing optimization yields excellent results
Odense Municipalitys' (Odense Kommune) target of saving DKK 206m in its purchasing budget before 2013 appears to have been reached ahead of schedule, and the procurement department expects to save an additional DKK 93m before 2015.
The effort has yielded excellent results: Ongoing follow-up efforts by Odense Municipality have shown savings in line with the 2013 target.
Controller Rikke Iversen and Purchasing and Procurement Manager Kim Døsing Sørensen, Odense Municipality.
Savings of 60% on doormat costs
With its many institutions, 11,000 suppliers and an annual purchasing budget of DKK 2.7 billion for goods and services, Odense Municipality is by no means a minor operation. The purchasing department uses SAS Indkøbsanalyse (Spend Analysis) to quickly get an overview of actual purchases and purchasers, which thus provides a basis for optimization.
For example, the costs of washing and renting doormats have been reduced by more than 60%. Odense Municipality was able to secure significantly better prices based on accurate knowledge of previous purchases in this category, which enabled a significant reduction in the range of products.
Data analysis contributes through many phases
“So far, we have primarily used SAS Indkøbsanalyse (Spend Analysis) to improve our tenders in the preliminary analysis phase – but we also see great potential in using the system to follow up on whether our contracts subsequently deliver the expected value,” says Purchasing and Procurement Manager Kim Døsing Sørensen.
“The initial benefits have already been achieved by centralizing purchases, reducing the product range and specifying which item numbers and volumes are actually needed so that suppliers can also make improvements,” adds Controller Rikke Iversen.
She points out that the effort of identifying purchasing savings becomes more complex as the project progresses. And as more municipalities are focusing on improving the efficiency of their purchases, it becomes more and more interesting to compare results, thus enabling further optimization based on best practice.
So far, we have primarily used SAS Spend Analysis to improve our tenders in the preliminary analysis phase – but we also see great potential in using the system to follow up on whether our contracts subsequently deliver the expected value.
Kim Døsing Sørensen
Purchasing and Procurement Manager
Strategic purchasing coming up
After realizing the initial savings, Odense Municipality set out to save an additional DKK 93m by 2015. According to plan, these savings will be gained through improved contract management and strategic purchasing.
“With strategic purchasing, we are moving beyond standard purchasing of products and services,” says Kim Døsing Sørensen. “We are looking at comprehensive solutions that require internal restructuring. In this way, purchasing and organizational development are closely interlinked.”
Ambitious optimization targets for purchasing in a large organization, where decentralized purchases have been standard practice for long.
SAS Indkøbsanalyse (Spend Analysis) provides a quick and detailed overview of the organization’s purchases, thus providing a basis for optimization. The system can also help ensure subsequent compliance with contracts.
Through data analysis and employee training, Odense Kommune achieved significant savings in purchasing.