Case Study: Delivery of Significant Cost Savings to a Large UK Retailer
Jeff Owen
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.
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We were approached by one of the fastest growing data centre providers in Europe. With over 20 data centres throughout the continent, they are consistently meeting the need for scalable, high-performance infrastructure. Despite this, a key data centre in Scandinavia had become reliant on a single, non-redundant 1 Gbps internet service from a local provider, posing significant risks to operational continuity. To enhance the reliability of its network and resolve these risks, our client needed to establish additional connectivity paths to ensure the redundancy of its infrastructure. The Ask Cambridge Management Consulting was engaged to address these connectivity challenges by identifying and evaluating potential vendors and infrastructure options to create second and third connectivity paths. This involved exploring various types of connectivity, including internet access, point-to-point capacity, wavelengths, and dark fibre. Additionally, Cambridge MC was asked to provide recommendations for building a local fibre network around the data centre to control and maintain diverse paths. This would allow the data centre to connect directly to nearby points of presence (PoPs) and reduce dependency on external providers, thereby enhancing network resilience and operational control. The goal of this project was to ensure that the Nordic data centre could maintain continuous operations even in the event of a failure in the primary connection. Approach & Skills Cambridge MC approached the project with a focus on ensuring operational continuity and resilience for the data centre. By identifying multiple connectivity paths, we aimed to mitigate the risk of network failures and ensure that the data centre could maintain continuous operations even in the event of a failure in the primary connection. This approach allowed Cambridge MC to provide a comprehensive solution to address both immediate and long-term connectivity needs. We employed a combination of Agile and Waterfall methodologies to manage the project. The initial investigative phase allowed a Waterfall approach, in which our team conducted thorough research and analysis to identify potential vendors and connectivity options. This phase involved detailed interviews with various telecommunications providers and an assessment of publicly available information. Once the initial analysis was complete, the workflow transitioned to an Agile approach for the implementation phase. This allowed Cambridge MC to adapt to new information and feedback from stakeholders, ensuring that the final solution was both flexible and robust. Challenges Lack of information: One of the primary obstacles we faced was the lack of detailed network maps and information from some of the potential vendors. To overcome this, the team conducted extensive interviews with contacts at these companies and leveraged its existing network of industry contacts to gather as much information as possible. Remote location: Another challenge was the remote location of the data centre, which limited the availability of local infrastructure and required us to explore creative solutions for connectivity. Cambridge MC addressed this by proposing the construction of a local fibre network around the data centre, which would allow for greater control and flexibility in connecting to nearby PoPs. Fragmented factors: Additionally, coordinating with multiple vendors and ensuring that their services could be integrated seamlessly posed a logistical challenge. We mitigated this by recommending a phased approach to implementation, starting with the most critical connectivity paths and gradually expanding to include additional options. 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Scope for Future Work: Cambridge MC identified several future developments with the potential to further enhance international connectivity and provide additional redundancy for the data centre. We also proposed further assistance, including a site visit for a more in-depth analysis of options, issuing RFI/RFP to vendors for capacity and fibre, and conducting similar connectivity studies for other candidate sites in the region.
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