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CLIENT CASE STUDY


RWE CZ: Transforming procurement for efficiency and profitability

RWE CZ and Accenture delivered a new, more strategic approach to procurement.

Overview

The RWE Group in the Czech Republic (RWE CZ) is a major importer and distributor of natural gas in the Czech Republic. With a distribution network of more than 70,000 kilometers of pipe, the company serves approximately 2.2 million customers, ranging from households and small businesses to large corporate clients.

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Opportunity

Facing significant pressure to improve earnings before interest and taxes, RWE CZ had conducted a number of improvement efforts to strengthen profitability. However, the company wanted to find more savings, and decided to focus on its procurement and sourcing activities—where it faced numerous issues. For example, procurement work was not divided up to allow for specialization and efficiency, approval processes were complex and involved duplication of effort, the company’s procurement function tended to operate in a reactive fashion, and employee headcount was higher than benchmark averages.

To help address these issues, RWE CZ sought an ally that could help it transform its procurement function, and turned to Accenture for assistance.

Solution

The effort began with a holistic analysis of procurement operations and spending, suppliers, and category management. This led to the identification of potential improvements and a roadmap for making those improvements. Working together, RWE and Accenture implemented a number of changes to increase the procurement department’s efficiency. These included the creation of a new procurement operating model—including a new organizational structure, streamlined and new processes, new skills, and a career model—and the implementation of master-data management capabilities to support improved automation and reporting.

Accenture then helped RWE CZ implement new strategic sourcing capabilities. Drawing on its proven seven-step sourcing methodology, Accenture provided RWE CZ employees with comprehensive strategic sourcing training and conducted a strategic sourcing pilot, and ultimately rolled the new sourcing approach out for 22 procurement categories. To help ensure the success of the new approach, cross-functional teams of managers, technicians, procurement, controlling, and Accenture consultants and sourcing experts were involved in the strategic sourcing initiative. Accenture worked with numerous departments, both technical (grid) as well as corporate, to address categories in both domains.

To facilitate a successful engagement, Accenture applied its seven-step methodology and cross functional teamwork consistently across the project. Ensuring that all teams used the same approach and that the methodology was used the same way for the duration of the work, Accenture helped to foster collaboration through a common kick off meeting, work involving cross functional teams, management validation meetings, and procurement committee meetings, to approve results.

Results

The transformation of procurement has given RWE CZ a more efficient and optimized operational environment, along with a clear focus on long-term strategic sourcing. It has increased trust and cooperation between procurement and its internal customers. And it has enabled the department to shift to a more proactive approach to procurement. The department has seen cost savings from the consolidation of spending and processes, more-effective demand management, and better make vs. buy decisions. Saving have ranged from 5 to 35 percent, depending on the category, with a total savings of nine percent across addressed spend.

The project has also demonstrated Accenture’s ability to bring a strong business case to major sourcing projects. Having delivered a project cost to yearly savings ratio of 1:6 to 1:8, RWE CZ and Accenture have better positioned RWE CZ to realize and sustain value and have strengthened the relationship between the two organizations.

“Our transformation program delivered a new, more strategic approach to procurement,” said Miloš Olejník, Head of Procurement, RWE CZ. “Our procurement department now has the tools, processes and skills that will allow it to keep improving operations and providing added value for the whole company over the long term.”