strategic sourcing

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Home | Results | Case Studies | Fortune 500 Private Equity Firm

Fortune 500 Private Equity Firm
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CASE STUDY SUMMARY
Gibson Helps Client Realize $10.9 MM in Sourcing Savings and $11.2 MM in Overall Plan Savings

  • Gibson's client consisted of 35 autonomous operating companies with over 100 North American locations securing approximately $130 million annually in health & welfare benefits
Industry
Business Services

Lead Partner(s)

Issue:

Our client consisted of 35 autonomous operating companies with over 100 North American locations securing approximately $130 million annually in health & welfare benefits at the operating company level. This approach resulted in a disparate network of suppliers, plan designs, contribution levels and data feeds.


Result:

Category realized $10.9 MM in sourcing savings, and $11.2 MM in overall plan savings. A consolidated supplier base with 10 suppliers managed centrally at the corporate level with local execution and attention at each operating company. In total, the project captured the benefits of common ownership to realize savings, enhance supplier service guarantees, and establish alliance partners.


Evaluation:

The Gibson team gathered and analyzed the client’s supply base and annual business requirements and spends. Potential savings opportunities were uncovered and various technical and organizational issues impeding cost-effective performance were identified.

Specifically, the Gibson team:

  • Conducted cross-functional interviews and focus groups with operating company management and employees to determine challenges, concerns and interests for a new benefits program.
  • Captured client specific business requirements needed to drive project success.
  • Worked in conjunction with a HR consultancy that ran data analytics and benchmark analysis against industry best practices.


Approach:

To achieve total cost savings on approximately $130 million in annual spend, Gibson Consulting Group implemented a Strategic Sourcing initiative targeting Health & Welfare suppliers across medical, dental, vision, pharmacy, health management, life/AD&D, EAP, COBRA and HAS/FSA partners. The Gibson team:

  • Delivered skill-based training to the client team in Sourcing Methodology, Executive Communications and Supplier Negotiations.
  • Invested significant time and resources to thoroughly understand the industry and supplier market.
  • Identified and engaged a wide-range of national, regional and select local suppliers to obtain the highest levels of operational value and coverage at the best overall cost for our client.
  • Produced and executed a live presentation hosted by members of our client’s executive team to introduce the Strategic Sourcing initiative to potential supplier’s senior management.
  • Utilized industry resources and market knowledge to capture competitive advantages throughout the sourcing process.
  • Defined and carefully developed category specific negotiable issues for effective and efficient negotiations.


Results:
  • Cost savings were achieved by reducing the client’s supplier base and significantly improving alliance management relationships with the selected suppliers.
  • Realized $10,900,000 in savings directly from strategic sourcing.
  • Negotiated implementation credits from suppliers to offset any costs related to supplier transition and implementation.
  • Established long-term mutually beneficial relationships with medical, dental, vision, pharmacy, health management, life/AD&D, EAP, COBRA and HSA/FSA partners.
  • Developed supplier performance metrics to ensure maximum service levels and employee satisfaction with selected suppliers.
  • Negotiated free-of-charge on-site support for operating locations from selected suppliers during open enrollment and health fairs.
  • Improved contract terms and pricing on top of existing contracts in select sub-categories.







 


Supply Chain, Strategic Sourcing, Progress, Goals, Results








 
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