Cost savings and procurement transformation at Nets
Following a change of ownership, Nets needed to deliver immediate, significant and sustainable cost reductions - procurement offered a major opportunity. Longer term, Nets also needed to transform the Procurement organization to support the future business needs.
Efficio worked with the business and the existing Procurement team to understand and challenge existing behaviors. Together, we identified a number of opportunities to reduce costs and improve existing service delivery. Total annualized savings of 10% on addressable spend were identified across all categories, and delivered through a holistic procurement program.
Efficio also helped design a new Procurement organization and transferred skills and knowledge to the Nets staff. The result is a radically improved Procurement function, with the capability to deliver ongoing value to the business.
Nets is a Nordic FinTech company specialized in digital payments, connecting banks, businesses, the public sector and consumers via an international network facilitating digital payments. With over 2,500 employees in five countries, Nets provides payment services for most households in Norway and Denmark, and has issued over 7.8 million digital identities. Following the acquisition by private equity investors, Nets began a transformation program focused on growth and improved customer service. Procurement was a key focus. Efficio was engaged to help deliver rapid cost savings while transforming the Procurement function for the future. The objectives of the engagement were to:
- Create spend transparency across all external spend and deliver significant, sustainable cost savings
- Strengthen the internal Procurement organization and add more value to stakeholders by facilitating new skills and ways of working - and by creating a major shift in culture and perceptions from both procurement staff and stakeholders
Traditionally, Procurement had not been a source of strategic value within Nets. It had been mainly restricted to an administrative function and had not been able to challenge existing ways of working to add value to the business. Changing those perceptions and securing the buy-in of key stakeholders were critical challenges. Efficio addressed these by identifying “lighthouse” projects, which could deliver quick and tangible results and build the credibility of Procurement within the business.
Efficio worked in cross-functional teams with Nets procurement team and key stakeholders in each category to identify savings opportunities. All potential levers were assessed on potential impact on the business. Moreover, solutions were driven by service delivery rather than simple cost reduction – driving real commitment from stakeholders.
Efficio led a series of rigorous, fact-based negotiations with suppliers to ensure the best outcomes for the client, in savings and service delivery. At the same time, Efficio helped Nets redesign the Procurement function; including assisting with recruitment to ensure the right people filled the new roles. We used structured training programs to transfer skills and knowledge to the client team. By using Efficio’s structured sourcing methodology and associated tools and resources, we were able to ensure that best practices were adopted and benefits could be sustained over the long-term.
Efficio’s approach was very collaborative. They were very good at engaging with our people and they worked hard to understand our business. They were great to work with; they challenged us and stretched our thinking without being too theoretical. Efficio brought a fresh perspective which helped us understand how we could do things differently to deliver better outcomes.
Efficio’s engagement helped deliver significant benefits to the client, including:
- Identifying total run-rate savings of 10% on addressable spend across all relevant categories
- Developing category strategies and detailed implementation plans for categories including: Professional Services, Network & Telecoms, Facilities Management, HR, Marketing, and Print, Postage & Distribution
- Significantly reducing the number of suppliers (e.g. Marketing from over 150 to eight)
- Delivering savings of over 28% on key categories by effectively applying all procurement levers available (e.g. demand management, price unbundling, etc.)
- Designing and implementing a central, structured procurement function with clear category responsibilities and business engagement guidelines
The Procurement function was revitalized, and its relationship with the business transformed. It is now a much stronger, more collaborative and more effective organization - laying the foundation to meet the changing needs of the business and deliver further value into the future.