A 5% boost in procurement can be worth as much as 50% extra sales

Every €1 that a business spends on improving its procurement practices delivers €10 back, according to Ingrid De Doncker, CEO of iDDea, a specialist procurement advice and training company based in Bandon, Co Cork.

Ingrid De Doncker, CEO of iDDea, says clients will gain €10 benefit to their bottom line for every €1 they spend with her company.

The figure is not her own. It comes from the US-based Institute of Supply Management, which also states that reducing costs by 5% up front has the same impact on the bottom line as a 50% increase in sales.

“If you focus on doing the right things, then this is a fairly typical return on your investment,” said Ms De Doncker. “However, many of us can be poor at selling that message, at getting people to see how a Lean mind-set can be a real multiplier on your business performance.”

iDDea’s subtitle is The Science of Value. It is a new entity, formed from the merger of award-winning Irish sourcing company e-Quiddity with procurement consultants IDD Consult.

Its clients include Altify, Arvo, Bord na Móna, Cork Chamber Business School Group, Irish Rail, Musgrave, Manchester City FC, Liberty Insurance, TreePro, and UCC, all of whom have seen valuable returns.

David Fallon, procurement manager in Liberty Insurance, said: “We worked with iDDea to deliver a new centralised procurement model that was warmly received across our business and is delivering savings to our bottom-line.”

Meanwhile, Mike McGrath, CEO of Arvo, is impressed by the newly merged entity: “The iDDea Team have been an instrumental part of our business, constantly innovating to deliver sustainable value. The iDDea approach is refreshing and results-focused and clearly based on a wealth of experience across many major industries and sectors.”

A procurement manager does a company’s buying and tendering. Often a finance person, they can come from any background. The first link in the supply chain, they’re good negotiators, good communicators who deal with suppliers across the full spectrum of their company’s needs.

“We go into our client companies and try to see where we can improve their procurement structures,” said Ingrid de Doncker. “Our clients often have procurement structures in place. They’re generally have a similar outcome in mind, they want to be sure they are getting the best value from the way they’re spending their money on procurement.

“With Liberty Insurance, for instance, we initially went in for one day a week to sit with the procurement manager. He was someone from a financial background; that’s fairly typical as there really isn’t anywhere that you can go to study procurement. He wanted to see some models for what a good procurement department should look, so that’s where we started.”

IDDea offers five key services: iDDea Academy delivers training in procurement skills; iDDea Team goes into the companies and does the work for them; iDDea consult redesigns processes, tools, and templates; iDDea Research conducts surveys on procurement competencies; while iDDea Community is a one-stop shop of best practices, tools and templates, with links to tend procurement competency centres in Europe.

“The process needs to be done by someone who understands good procurement,” she said. “One client wanted to upskill someone internally; now that person is on the road, with their own road map of projects. Next week, we will go back and help them with some more complex processes.”

Ms de Doncker says IDDea first needs to understand what a person did in the past, their spending analysis, their analytical skills, and work from the previous year’s performance.

Then IDDea looks at topics ranging from category management, IT facilities management, then bring some market intelligence into the tendering phase.

The optimum decisions for the client bring in questions about their priorities on quality, cost management, flexibility. It’s also vital for the formal contract to set clear performance markers, and for these to be measurable on a monthly and/or quarterly basis.

“For some suppliers, you just want a fast exchange; just to get the best quality products for your money. For strategic suppliers, those who have a key impact on the quality and even the existence of your business, you may need an SRM (supplier relationship management) strategy.

“You can gauge the importance of the supplier. Ultimately, the goal is to get as much clarity as possible between the two parties.”

With many tenders, particularly with public sector tenders, tight regulations may involve tender documents of 80-120 pages, but with only five or six key pages. Even with all this data, however, it’s important that both parties have a clear understanding on what they’re agreeing upon.

“We have people who do the buying for our clients, people who work on contracts, and manage the process from start to finish. We also have people who deliver training,” said Ingrid de Doncker.

“We are confident to tell the financial controller that they will get back €10 for every €1 they spend with us.

“That’s an average figure. Sometimes we deliver €22 for every €1, but I think it’s fair for them to expect a 10-to-1 return on investment.”

  • www.iddea.ie


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