Case Study: Delivery of Significant Cost Savings to a Large UK Retailer

Utilising our significant experience in procurement and contract management, Cambridge MC delivered £10m of savings on an addressable budget of £80m

A large UK online retailer went through a downsizing exercise in the early part of 2023. This caused significant changes in demand, meaning that expenditure in many areas was far more than the business requirement.

There were also instances where certain technologies were no longer required, but long-term contracts were in place that needed to be negotiated out.

The goal of the project was to review all current vendor and supplier contracts, identify where savings could potentially be made, and then work with the procurement department to reduce the current level of expenditure to meet current business requirements. Our team was given a three-month deadline to make savings to the bottom line.

Project Overview

Cambridge MC was engaged on a three-month project to perform the following:

• Perform a deep dive on all vendor contracts against the current business.

• Establish priority saving areas and launch projects.

• Challenge demand and specification requirements.

• Build a cost reduction report.

• Engage in supplier negotiations in conjunction with the client's own procurement team.

• Produce weekly reports on cost savings achieved.

Our experience in procurement, contract, and vendor management enabled us to completely meet the brief set out by the client which was to deliver significant bottom-line savings in a three-month turnaround.

Specific Challenges

• Client had lost control of spend across the business.
• They had no awareness of what contracts had auto-renewed.
• They had signed long-term contracts.
• Some contracts had recently been extended for 24 months or longer.
• Due to downsizing, the volume of licenses for certain technologies were way above the actual requirement.
• Client had an inexperienced procurement team.
• Recent staff turnover meant that contract owners were no longer in the company.
• They had no contract management platform in place, resulting in contracts not being readily available.
• Most vendors were reluctant to renegotiate contracts at a lower cost to the business.
• Procurement had a process—not price—focus.

Solutions

• Cambridge MC employed a data-driven analytical approach which prioritised target spend and volume data.
• All existing agreements and contracts were 'fair game'.
• We challenged what was the actual demand and specification, questioning whether what they have today is still relevant to what is needed now and in the future.
• After performing a deep analysis of all contracts, we entered into negotiations with vendors where the existing contracts did not meet the business requirement due to downsizing.

Approach

• Vendors were allocated across the Cambridge MC team.
  
• Weekly all-day meetings at client's offices.
  
• Regular video conference calls to update progress.
  
• Engaged department heads as required.

Outcomes & Results

1. Cost Savings

In excess of £10m savings achieved off the bottom line.

2. Knowledge

License requirements reduced to the correct level for the business.

3. Diligence

Contracts managed far more closely.

4. Efficiency

Procurement team coached to function more efficiently.

5. Commitment

All contractual obligations were met.