Strategic Review of Purchasing Alliance for three of the largest retailers in the Nordic region

The clients, three leading discount retailers in the Nordics decided to conduct an assessment of their current joint sourcing operations, and more importantly an assessment on what the desired state of joint sourcing operations would be in the future.

The aim of the project was to gain a strategic understanding on what the sourcing alliance should look like, what it should focus on, and what actions are needed in order to remain competitive and to improve further.

The study involved a comprehensive spend analysis, an internal as-is-analysis, both individually and jointly, as well as a comprehensive benchmarking study of industry peers. The study identified several opportunities for improvement for all parties involved as well as necessary steps and requirements going forward.

Cargo containers at a Norwegian port

There is already an established joint sourcing office between two of the three parties.

By combining all three parties’ volumes in the areas of large volumes and similar products, huge cost savings are to be found.

The clients are all aiming to be at the forefront of the industry and by having ARC Consulting conducting a benchmark study and identifying all the industry trends as well as areas of improvements the alliance would distinguish which areas should be prioritized moving forward.

ARC Consulting initiated the process with an internal as-is-analysis, both individually and jointly for all three parties.

During the as-is-analysis, spend analysis were conducted for all parties including;

  • Expense Analysis
  • Efficiency ratio
  • Supply-base analysis
  • Alternative market analysis
  • Overview analysis of the internal sourcing processes

In parallel, ARC Consulting conducted a benchmark study of 5 other relevant sourcing and purchasing organizations to get an overview of the industry and identify industry trends and key takeaways for the alliance.

ARC Consulting identified risks in the lack of a formal ownership within the alliance, as well as lack of well-defined strategy and guidelines for the joint sourcing process and no reviews of measurable KPI’s are conducted.

The study also illustrated the trends of industry peers, such as increasing expansion on alternative markets, especially in Southeast Asia.

The clients asked ARC Consulting to act as an trusted partner for the upcoming stages including setting up a new ownership structure, expanding to new markets as well as a implementing the findings in the strategic review.

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