As mass-customization giant Vistaprint, known for printing a range of paper items from custom business cards to photo albums, began to acquire its competitors in the industry, it faced the newfound challenge of how to best manage procurement among its new subsidiaries and onboard their respective suppliers — all while reducing costs.
Each of the brands focuses on different markets such as customizing bags, clothing, household wares, office supplies or print products in various domestic and international markets but were brought together in 2014 under one newly formed parent company, Cimpress.
To manage such a diverse portfolio, Cimpress executives made the decision to let them function as independent companies, Evert Karsen, VP of Procurement at Cimpress, told Supply Chain Dive in an interview.
However, as far as procurement was concerned, Cimpress’ leadership knew there were greater savings to be gained by centrally negotiating bulk contracts for the supplies all the brands had in common versus allowing a siloed brand-by-brand approach that would result in smaller, more expensive and potentially redundant contracts that would be harder to manage strategically.
"It's a learning curve," Karsen said, "because each of the businesses keeps total independence on what they do, what they make, what they sell and the way they approach the market so the businesses run independently. ... They are often using different suppliers with different specifications." However, when Cimpress acquires a new company, Karsen said, the new business usually moves to Cimpress' centrally-negotiated contracts because they are more cost-effective.
There are times when one of the businesses needs something that isn't covered in one of Cimpress' main contracts, and in those instances Karsen said Cimpress works to maintain close relationships with the subsidiaries to stay aware of their activities and/or identify ways to bundle those needs with those of other brands to negotiate a larger contract with suppliers.
To do all of this effectively requires Cimpress to maintain supply chain visibility and establish an agile procurement function, centrally and across its subsidiaries. Rather than navigate multiple separate procurement databases at once, Cimpress turned to the Finnish procurement analytics firm Sievo in 2017 to establish a one-stop platform to effectively "mass-customize" procurement across the organization.
By automatically integrating with the ERPs in use throughout the company, Sievo's platform offers visibility into KPI performance, contract negotiations, spend and supply levels across each brand. This allows Cimpress to negotiate core contracts cheaply while giving each brand the flexibility to adjust its procurement activities based on its own specific needs, Jordi Rubiés, procurement excellence manager at Cimpress, told Supply Chain Dive.
"We all know that in procurement, volume equals better contracts," Karsen added. "So it's this equilibrium of 'how do I get volume without mandating a [single] solution on the business?'"
After the Sievo implementation was complete, a process that took roughly six months, Karsen said Cimpress was able to achieve cost savings of 8% on core category and 11% on overall procurement spending using its hybrid centralized-independent approach.
Procurement meets SaaS
There is broad recognition in the procurement industry that there is too much incoming data to function efficiently by spreadsheet alone. Enter the rise of an entire software-as-a-service (SaaS) marketplace with companies, Sievo included, promising not only to manage supply chain data automatically, but to analyze and visualize it in real-time.
As a result, some procurement functions that have invested in selectively digitizing key aspects of their work have achieved better supplier qualification and onboarding processes, faster and more transparent contract negotiations, and enhanced long-term planning capabilities by handing over some of the heavy lifting to these new platforms.
In Cimpress' case, the transition to Sievo's analytics platform has, among other benefits, given the company better insight into its global supplier network, offering procurement leaders a single, real-time source for qualification and onboarding across its brands.
When working with international suppliers, "you can have different names for different things and it can be hard to tell exactly what you are buying or do benchmarking on pricing and payment terms and lead times," Karsen said.
A few years ago this was a difficult process due to lack of real-time data on supplier operations. However, thanks to its transition to a digital system where suppliers can upload this information as part of the qualification and negotiation process, Karsen said it has reduced the amount of time it takes to go through the whole process from one to two weeks to under two hours in many cases.
Leveraging cost savings to prepare for the future
According to a recent report from the Hackett Group, procurement firms that successfully implement digital process automation into their operations can save as much as 45% on overall costs. Additionally, based on a recent survey conducted by finance analytics firm Suplari, 77% of procurement and finance leaders expect a recession to hit by 2021. As a result, many are choosing to reinvest cost savings from digital transformation, contract negotiations and other sources into reinforcing company, or departmental, bottom lines.
When pursuing a digital shift to streamline and save costs, it is important for procurement leaders to think about the impact to the business beyond logging into a shiny new system. The people using the new tools can make or break the success of the investment.
"[At] the end of the day it is still [up to] the people to take advantage of these benefits," Aapo Kuulasmaa, key account manager at Sievo, told Supply Chain Dive via email, "and thus change management and user engagement are the key success factors for successful transition to a procurement analytics platform."
"We all know that in procurement, volume equals better contracts."
VP of Procurement, Cimpress
For Cimpress, the cost savings from the Sievo implementation are being reinvested as part of a company-wide digital transformation effort. The organization is pulling together a suite of in-house and external technology tools that will be available to all its brands, Karsen said, allowing them to pick and choose the platforms that best suit their business growth.
Rubiés noted that as the number of data analysis and automation tools continues to grow in the procurement space, Cimpress is investing in professional development for employees to "future-proof" operations by sharpening their digital skills.
This has not only helped facilitate the transition to the new Sievo platform and the company's broader suite of programs, but will ideally help the company keep up with technological innovation in the procurement space going forward.
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Correction: The location of Sievo's headquarters was previously misstated.