Becoming the most efficientinternational bank in the world:Transformation of the purchasingfunction in Santander
Santander at a Glance We are the international banking group with the largest branch network…                … one of the ...
Efficiency is a strength and a fundamentalpart of our business model     Efficiency Ratio vs. Peers* (%)    2011 data     ...
Santander’s journey transforming itspurchasing function                                                                   ...
Lever 1: Cost Management &Procurement Model                     Spend Request    Spend Approval Forums Budget Managed by  ...
Lever 2: Outsourcing of thepurchasing function to Aquanima                Responsibilities          Relationship model    ...
Santander’s Purchasing Key Figures    Purchasing Perimeter                                                                ...
Aquanima is expert in cost managementwith a presence in 11 countries and over 10years of experience                       ...
Our experience has shown us there are 4 keysuccess factors needed to capture long termoptimizations                       ...
We are specialists in more than 120  categories at a global level                                                         ...
Our disciplined approach uses several levers togenerate savings in an efficient way                                       ...
Our technology creates competitive markets    maximizing savings                                                          ...
We have significant experience in usingdifferent kinds of online negotiations toobtain the best results                   ...
Increasing the purchasing perimeteris a continuous and challenging task                                       Specializati...
Success story: Marketing Media AdvertisingPrevious situation and strategies implemented Customer of the financial sector ...
Thank youAndrés Franco – andres.franco@aquanima.com - +34619261650 www.aquanima.com
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Becoming the Most Efficient International Bank in the World: Transformation of the Purchasing Function in Santander

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Becoming the Most Efficient International Bank in the World: Transformation of the Purchasing Function in Santander

  1. 1. Becoming the most efficientinternational bank in the world:Transformation of the purchasingfunction in Santander
  2. 2. Santander at a Glance We are the international banking group with the largest branch network… … one of the largest banks by market capitalization.. 1000 3000 6000 7000 8000 11000 13000 16000 generating recurring results… Net operating income EUR billion, With more than 190.000 employees serving more than 102 million customer worldwide
  3. 3. Efficiency is a strength and a fundamentalpart of our business model Efficiency Ratio vs. Peers* (%) 2011 data Santander is the most efficient international bank in the world
  4. 4. Santander’s journey transforming itspurchasing function Evolution to a • new model Global Purchasing • Traditional • 2004 • •2005-2007 2008 - • • Focus on price • e500 project to reduce costs • Corporate Cost & Procurement • Distributed function • Local and Global Category structure Model (15% purchasing perimeter) • Centralization from business units • Total outsourcing of the purchasing • Transactional focus • Specialization of categories in function to Aquanima • Administrative nature of resources Aquanima • Some eProcurement • Increased online negotiations
  5. 5. Lever 1: Cost Management &Procurement Model Spend Request Spend Approval Forums Budget Managed by the CMU Head Reserved Funds Spend Challenge Contracts, PO’s & Invoices Demand management savings Negotiation savings
  6. 6. Lever 2: Outsourcing of thepurchasing function to Aquanima Responsibilities Relationship model eSourcing  Key Account Managers Purchasing  Annual purchasing plans with Factory Contract Management shared objectives  Corporate SLA’s eProcurement  Global organization with local presence SRM
  7. 7. Santander’s Purchasing Key Figures Purchasing Perimeter Savings €millions, % of Third Party Payments €millions, % of Perimeter Negotiated 5,651 531 501 503 4,654 3,903 2,961 235 • 75% • 83% • 79% • 77% • 8% • 14% • 14% • 13% • 08 • 09 • 10 • 11 • 08 • 09 • 10 • 11 Online Negotiation 1,999 €millions 1,271 1,055 593 • 08 • 09 • 10 • 11
  8. 8. Aquanima is expert in cost managementwith a presence in 11 countries and over 10years of experience UK ALEMANIA USA PORTUGAL • Presence in 11 countries. Corporate ESPAÑA headquarters in Madrid (Spain) MÉXICO • A multidisciplinary team of more than 250 procurement specialists • Negotiated volume exceeds 18 Billion € in over 30.000 negotiations generating savings COLOMBIA BRASIL of 12% (2.2 Billion €) • Commercial model based in a percentage of URUGUAY CHILE savings ARGENTINA
  9. 9. Our experience has shown us there are 4 keysuccess factors needed to capture long termoptimizations SPECIALIZATION CENTRALIZATION METHODOLOGY TECHNOLOGY
  10. 10. We are specialists in more than 120 categories at a global level Specialization Main categories Centralization 1145 Methodology Technology 812 527Volume 385 NOT EXHAUSTIVENegotiated 336(MM€) 296 252 139 • Deep knowledge of the supply markets 105 98 74 51 33 with proven experience – locally/globally • Continuous standardization and 2149 optimization of specifications andNumber of 1423 596 1004 processes to optimize the TCOnegotiations 346 154 233 203 • Exchange of Best Practices among 138 100 29 26 54 industries and geographies • Healthy debate with the business units to increase competition while ensuring quality
  11. 11. Our disciplined approach uses several levers togenerate savings in an efficient way Specialization“Scientific” approach: Define Negotiate with Identify need sourcing suppliers Centralization and current Send RFI and strategy and situation. Award analyze market establish RFP Rounds eAuction Methodology Technology Establish objectives and collaboration commitmentsClose team work with business units: Spend Management improvement Process  Reengineering  Logistics Integration Optimization  Joint R+D with• Technical specifications definition supplier Volume consolidation• Spec Reconfiguration Approval of RFQ• Supplier participation  New supplier Global vs. Regional  Reduction of supplier relationships Restructuring the development portfolio  Strategic alliances  Standardization Sourcing• Results approval  Geographical expansion  Purchasing consolidation  Normalization  SRM: Key suppliers development  Concentration with  Volume redistribution  Substitute products  Supply chain other companies  Grouping with similar integration “categories/Families”Templates: Best price Open  Credible market threat• RFQ’s by category (Penalties, SLAs, Quality Benchmark  Price renegotiation  Open cost structure Spend Management negotiations based on measurement, etc.) “win & win” premise Innovation• Contracts
  12. 12. Our technology creates competitive markets maximizing savings Specialization Electronic catalogs: Centralization Methodology Technology • Average savings • 2011* 14,3 % 46% 9,8%Online Negotiations:• Understood as a key tool and the final step of a process• Increased transparency with the supply market• Efficient price definition process by the market with real-time information % offline savings Online savings
  13. 13. We have significant experience in usingdifferent kinds of online negotiations toobtain the best results Least complex Most complex Type Based solely on Qualitative Complex formulas Closed Alternative award Successive price parameters envelope scenario Rounds Characteristics • Cost per • Technical • Use of financial • Similar to offline • Several specialists • Restrictions on article/ weighting of models with large sealed envelope vs. generalist award depending on reference offers (previous number of tender bidding combining diverse how the event experience, user variables items as a single unfolds • Simple • Large gap assessment) supplier formula: price • Application of between first • Market alignment x quantity • Adding up of discounts by and second • Contract with a supplier’s volume scales placed bidder term of one or specific costs several years (cost of change) • 3- to 5-year guarantee Examples • PCs • Temp Agencies • Advertising • Account • IT maintenance • Maintenance of statements in premises • Promotional gifts • Sales force • Outplacement • Purchase of PCs color • Storage of • Printed material • Lap tops • Training • Hotels • Advertising mainframes • Hotels • Exterior advertising • ATMs
  14. 14. Increasing the purchasing perimeteris a continuous and challenging task SpecializationWhy? Centralization• Sustains high average savings over time Methodology Technology• Increases the visibility and value of the purchasing function• Creates professional challenges for the teamWhere?• Non-traditional categories like Marketing, HR, Consultancy• New business units like Real State Company, Leasing & Renting• Income related categories like Debt collection
  15. 15. Success story: Marketing Media AdvertisingPrevious situation and strategies implemented Customer of the financial sector with global operations needed to optimize the contract conditions of media advertising Comprehensive planning and media purchasing service: Online and Offline Identification, evaluation and approval of media agencies in each market Increase competition in “certified” media agencies exploiting the difference in fees, commissions and rappels Results achieved in media advertising Open and transparent category cost structure: media cost, agency commission, Rappel • 329 MM € negotiated Target type weighing (Adults, Housewives,etc.) combining: • 36 MM € (10,8%) savings  Media Mix  Prime time • 730 negotiations  Round position  Formats • 10 clients
  16. 16. Thank youAndrés Franco – andres.franco@aquanima.com - +34619261650 www.aquanima.com

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