Telecommunications – Diversified Industrial Conglomerate

The client lacked a centralized and coordinated approach to purchasing telecommunications solutions. Multiple global and local providers were utilized across over 250 production and sales locations, diluting the potential for purchasing power benefits.

The consulting team collected and analyzed the client’s telecommunications supply base, annual business requirements, and expenditures. Opportunities for savings were identified, along with technical and organizational challenges hindering cost efficiency. Specifically, the team:

• Interviewed business unit managers and IT professionals to assess the current state and identify telecommunications needs.
• Explored opportunities to include all global, national, regional, and select local suppliers in the qualification process to achieve operational benefits and reduce costs.
• Identified three target categories for strategic sourcing: data lines, wireless solutions, and conferencing services.

To achieve comprehensive cost savings, KGM Strategy launched a Strategic Sourcing initiative targeting Telecommunications, with an annual spend of approximately $8.2 million. The team:

• Gathered and documented detailed purchasing profiles and data requirements for the three target categories.
• Provided training to the client’s team in areas such as Methodology, Executive Communication, Negotiation, Supplier Due Diligence, and Alliance Management to ensure sustainable improvements.
• Invested significant time and resources to gain a deep understanding of the industry and market dynamics.
• Developed category-specific negotiable issues for effective and efficient negotiations.
• Encouraged the client to evaluate all providers during the assessment process.

Cost savings were achieved by consolidating the client’s supplier base and enhancing alliance management practices.

• Achieved $3.4 MM (42%) in annual savings.
• Streamlined the supplier base to a single core provider for all target categories.
• Provided the client with comprehensive visibility into their telecommunications spending for the first time.
• Enhanced product offerings for the client’s workforce.
• Established a structured alliance management review process to ensure the partnership’s ongoing success.
• Created a central point of contact and support to manage the relationship between organizations.
• Improved compliance monitoring by consolidating all telecommunications purchases under a master corporate account.