Procurement is its own worst enemy. After working hard for many years to increase awareness in the boardroom, the boardroom is now asking for more savings and faster. Gone are the quick wins of old, now savings are hard earned and must be carefully managed to ensure they deliver on promises. Procurement professionals are therefore faced with the task of identifying ever more complex savings opportunities, assessing their potential value, complexity and risk, implementing the initiative, and then tracking the realisation of the opportunity through compliance and performance metrics. Finance will also quite rightly want to be involved in order to understand the real financial impact on the bottom line… often with a different viewpoint than Procurement. The presentation covered the types of saving that can be identified, common pitfalls to watch out for when identifying and claiming savings, and the KPIs that can be used ensure visibility of the solution. BravoSolution offer a flexible set of solutions to assist procurement professionals manage the complexities of delivering a complex savings programme and the session will include a hands on look at these covering spend analysis, savings identification and management, approvals, and forecasting. The session also saw case studies presented by Amcor, a global packaging leader and the Post Office, a retail, finance and insurance organisation.

1. Post Office’s approach
to Benefits forecasting
Sujai Jayaram and Sara
Hollingsbee
BravoConnect 2014

2. • In June 2011, the Postal Services Act was passed into law
enabling Royal Mail to be partially privatised while retaining Post
Office in state ownership
• Started a process of separation into two independent companies,
which is now nearly completed
• All shared services to be separated, starting with Procurement
• Fully independent Procurement team, working to complete the set
up of independent support functions to complete separation
• Investment approved to replace e-Sourcing platform
Post Office is undergoing significant
change…

3. • Previously a small part of a bigger group, with a solution to fit
group needs
• Desire to reduce administrative burden on procurement
• Revised RACI model working with Finance for validation and
tracking of delivery against actuals
• Switch in focus from controlling the benefits forecasts (line
approvals for every change) to managing risks which affect benefit
delivery
…which gave us an opportunity to do
things differently

4. • Each initiative is tracked through Programme Manager
• We use system to harvest this information through Project Form,
as well as risk flags (to timing and value) and general project
updates.
• Phases of an initiative
• Scoping
• In Progress
• Contracted
• Once contracted, benefits are validated and handed over to a
dedicated performance management team within Finance for
tracking against actuals
We use Programme Manager to capture
and validate benefits forecasts

5. We capture Information from
the Project Form (1)
• Mandatory fields
• Forecast in-year benefits (£)
• Benefits type (Budgeted, Non-budgeted, Revenue
generation)
• One-off/Recurring
• Expected signature date
• Risk to value of benefits over contract duration
(On-track, At risk but recoverable, At risk, non-
recoverable)
• Risk to timing of benefits realisation (On-track, At
risk but recoverable, At risk, non-recoverable)
• Enable us to calculate and manage targeted
benefits metrics including a full-year-forecast
• Risks in timing or magnitude of savings are
captured against achieving the full-year-
forecast
&

6. We capture information in
the Project Form (2)
• Non-mandatory fields
• Comments field as free-text
• #FTE days required to complete
• Simple check for category lead to check
status for any projects not showing ‘On
Track’ for either value or timing of
benefits
• Succinct way for category lead to decide
on best course of action
• Effort required to complete allows
category lead to discontinue initiative if
effort can be better deployed elsewhere

7. …which feeds into a weekly
reporting dashboard
• Tabular format showing project status for
on-going projects
• Summary tables for benefits delivery by
category team and then overall
procurement totals by benefits type, both
delivered and full-year-forecast
• We expect targets to change annually to
reflect the financial priorities of the
business
• We expect to balance cost-out objectives
with non-financial objectives as we
approach full maturity as an organisation

8. Benefits validation
• Dedicated Finance Performance
Management (FPM) team which
validates benefit forecasts (not just
Procurement)
• Budgets adjusted at contract signature
• Data used to validate benefits:
• 3 months of relevant historic spend data (12
months if highly seasonal)
• Split by G/L code and cost centre
• Excel calculation of forecast benefit against
this baseline (documenting any
assumptions)
• Discussions with managers of main affected
cost centres

9. This works for us because…
• Simple company structure, single
business unit and single country
• Devolution of accountability for
adherence to budget to cost centre
managers
• Ability to adjust budgets within year to
‘lock-in’ contracted benefits, with buy-in
at cost centre manager level
• Shared recognition between Cost Centre
managers, Procurement and Finance for
identifying, contracting and delivering
benefits to the business