Mini case 2:

You have just been hired as a Procurement Consultant for City Global Bank (CGB), which has 15 branches in Canada.

CGB is growing at a rate of over 20% annually with its exceptional customer service and financial solutions, especially in unavoidable unplanned circumstances. The head office is located in Ottawa, and each field office has a branch manager who is solely responsible for the profit and loss of its branch. Their goals are aggressive and focused on achieving revenue.

All branches meet or exceed the budget each year.

Costs are rising at the same rate, which is not a good sign.

With the increase in business volume, the corresponding savings have not been realized. There's a general feeling..."if we need it, we'll buy it"...

There are cases of maverick and rogue buying, often with a lack of focus on the total cost of ownership (TCO).

CGB has a central supplier or supplier management department, but the purchasing function is not centralized. As a consultant, you have been given a full travel and expense budget and have a 4-month period to develop a future purchase plan. The CEO is willing to centralize the purchasing activities of all 20 branch offices to the headquarters for all purchasing in Canada.

Any future proposals would also have to allow the 15 branches not to be hampered by new processes that could distract them from their goal of hitting revenue profit targets.

Accountants (centralized at headquarters) said that 70 percent of paid invoices were from similar suppliers, and in many cases, all 20 branches purchased the same products and services.

At least 10 branches have warehouses, albeit of different sizes, with similar material handling equipment. The remaining 5 shared warehouses, because they are all in big cities and close to each other.

Accounting advice from an accounting perspective, they have 8 branches that are excellent "accounting role models" and 5 "disaster" branches. There is a clear opportunity for improvement in accounting advice balances. The accountants were amazed that they were doing well in meeting their profit targets and thought it had a lot to do with a sound economy and cost control.

You have a full travel budget and per diem, and you have 4 months to complete your future state advice: (minimum 1-page, single space).

1. Outline the steps to understand the current state or as is of the 15-branch purchasing process?

2. Who will you meet and consult to understand current savings potential and develop future budget goals?