$90M procurement cost reduction through category management

The company’s global procurement organization was structured around regional centers whose overlapping positions and misaligned priorities left value on the table. It needed a structure that maximized the value of its resources while improving service to internal business customers.

Procurement in integrated oil and energy spans categories as different as drilling services, chemicals, logistics and professional services, each with its own market dynamics. A structure that concentrates expertise by category, rather than by geography alone, is how buying power reaches the negotiating table in each of those markets.

WGA designed, developed and deployed a category management strategy for the global procurement organization. Regional procurement centers were realigned around categories, overlapping positions were consolidated across the enterprise, and service levels to internal customers became a managed metric.

The redesign moved through design, development and deployment in sequence: the category structure and ownership model first, the realignment of regional centers second, and the consolidation of overlapping positions as the new structure took over the work. Service levels to internal business customers were instrumented from the start, so the organization could see quality holding while the structure changed underneath it. Value was measured in year two, against the structure, when the savings were genuinely attributable to it.

Results as the client recorded them, in its own operating metrics: Over $90M in operational cost reduction in year two of the structure

All internal metrics for speed, quality and customer service increased

Overlapping positions consolidated across the enterprise