Tailoring an indirect procurement platform to the needs of a luxury retailer

An optimal procurement framework gives a luxury brand the tools it needs to walk the razor’s edge between a host of competing demands – like exclusivity and availability. Or between using customer data to deliver exceptional customer experiences and keeping that data secure.

One luxury retailer saw signs that its indirect procurement capabilities were becoming unacceptably dated, making it challenging to keep pace with modern demands. Knowing it needed a clear-eyed assessment from someone well-versed in the complexities and nuances of procurement, as well as the unique challenges of luxury retail, the company turned to KPMG. 

Modernized IT procurement is a must-have for comprehensive transformation

After KPMG developed a wide-ranging and in-depth understanding of the retailer’s indirect procurement capabilities, it was clear that procurement transformation would require technology upgrades. Ironically, as is the case with many companies, this retailer was thwarted from purchasing new IT due to an inefficient IT purchasing end-to-end process with disparate systems that had not been integrated.

The retailer embarked on a multi-phased transformation project with the initial phase being the development of a Minimum Viable Product (MVP). This MVP would quickly address IT purchasing challenges and enable the scalability to power an all-encompassing procurement transformation.

Defining an IT procurement makeover

A successful IT procurement transformation would need to address the multiple challenges this luxury retailer was facing: 

• Inconsistent workflows: Different departments followed different procurement processes leading to a lack of standardization and increased complexity. 
• Manual processes: Workflows were manual and often email-based, requiring “swivel chairing,” or entering the same information into multiple systems, decreasing efficiency, and increasing the margin of error.
• Limited visibility: A lack of transparency into procurement workflows made it difficult to track requests and identify the source of delays.
• Compliance concerns: A lack of standardized processes heightened the risks of running afoul of data protection and other regulatory requirements and failing to comply with internal policies designed to mitigate legal and financial risks.
• Tracking and managing SLAs: Difficulties in the effective tracking and management of service level agreements (SLAs) caused inconsistent recording, delays, and miscommunications, leading to operational disruptions and difficulties in ensuring vendor compliance.
• User frustrations: Employees found procurement processes difficult to navigate and experienced difficulties in securing the hardware, software, and IT staffing solutions they needed.

The impact of these challenges on employees increased the probability that they would bypass procurement process and policy altogether. The consequences can include engaging with unauthorized suppliers, overpaying for goods and services, or worse. 

Cesar Suarez, a KPMG Director in the Procurement & Supply Chain practice, warns, "If you engage with a company on a blacklist, cut a deal with them, and sign a contract, you might not only be incurring ‘maverick’ spend but also potentially putting your organization at risk." Cesar emphasizes, "Any organization that has not implemented a modern Spend Intake & Orchestration solution may not be able to accurately manage spend to generate savings and have significantly elongated purchasing processes that frustrate your end users.”

Adam Pflantzer, a KPMG Digital Transformation Manager, recognized how these challenges impacted the top-down view. "The company felt like the procurement process they had in place didn't allow leadership to see where the bottlenecks were. They needed metrics to understand exactly which groups were at fault, at which times, or if it was the vendor they were waiting on."

A powerful platform for short-term gains and ongoing transformation

The client and KPMG embarked on an initial phase which was the delivery of an accelerated MVP encompassing the procurement process from end to end. By focusing on the entire procurement lifecycle, the team help ensure that every critical step, from initial requisition to final contract management, was optimized and integrated, with a particular emphasis on intake and orchestration to streamline the collection and coordination of procurement requests, bids, and more.

ServiceNow SPO (Sourcing and Procurement Operations) was selected as the new procurement platform due to all that it offers:

• End-to-end solutions that can help manage the entire procurement lifecycle
• Robust integration capabilities that allow for more seamless data exchange with existing systems
• User-friendly interface and customizable workflows that can help meet the needs of a large organization with diverse procurement needs
• Powerful automation capabilities that can help reduce manual tasks while increasing efficiency and real-time visibility
• ServiceNow’s track record of helping deliver scalable and secured solutions for enterprise-level organizations

Transforming IT procurement in five powerful ‘agile’ sprints

The project spanned five development sprints, each focused on a key stage of the procurement process—from streamlining the creation and approval of purchase requests, to automating and the intake and orchestration of bids, to standardizing the order fulfillment process. 

Each sprint was designed to build upon the previous one, allowing the team to iteratively refine and expand the features and capabilities of the solution. This agile approach helped ensure that the project remained flexible and responsive to any emerging issues or feedback.

Tailoring data management to a new system

Data management and process simplification were key considerations throughout the project. The team focused on integrating existing data sources and helped ensure that the new system could handle the volume and complexity of the retailer's procurement data. This involved data migration and cleansing along with process optimization.

Certain ServiceNow configurations were excluded from the first release of the solution to manage the project's scope and cost effectively while delivering impactful results to the organization. These exclusions were based on a careful assessment of the client’s immediate needs and the potential for future expansion. By focusing on the most critical configurations, the team helped ensure that the solution was both feasible and impactful, setting the stage for more advanced features to be added in subsequent phases.

Two companies working as one team

The success of the project hinged on a joint enablement approach. The client provided deep insights into its existing processes, pain points, and business requirements, while KPMG brought prior knowledge of the retailer's operations, deep knowledge of delivering procurement orchestration services in consumer and retail as well as financial services, healthcare and life sciences, and other industries, along with and extensive experience in ServiceNow implementation. 

Clear communication and alignment were paramount. Regular check-ins, detailed documentation, and collaborative workshops helped ensure that both teams were on the same page and could address any issues promptly. This approach fostered a sense of ownership and commitment, which was crucial for the successful implementation of the first release of the solution.

Procurement Intake & Orchestration: A new more modern approach to IT procurement

By the end of the project, IT procurement looked entirely different for this luxury retailer.

• Standardized workflows across all departments and a single portal and front door for all IT purchases helped reduce complexity
• Automation in areas such as approval routing, risk checks, and notifications helped reduce manual tasks and improved efficiency and accuracy
• Transparency and real-time visibility reportedly rose significantly, supporting more informed decision-making, faster problem-solving, and optimized resource allocation
• Enhanced vendor and contract management helped support compliance and mitigate risks

KPMG focused on standardizing one component of the organization’s complex procurement process and function. The retailer is now focusing on the adoption and adaptation of a standard process with a new platform. The objective is to gain momentum and identify other opportunities to increase visibility, standardization and automation.

By addressing these three critical issues, this retailer has not only enhanced its IT procurement process but also set a benchmark for modern procurement practices. The bottom line: Companies that update their indirect procurement capabilities may ultimately be more efficient and effective from the back office to the front line.