India Economic Survey Complete for the year of 2022 to 2023
Becoming the Most Efficient International Bank in the World: Transformation of the Purchasing Function in Santander
1. Becoming the most efficient
international bank in the world:
Transformation of the purchasing
function in Santander
2. Santander at a Glance
We are the international banking group
with the largest branch network… … one of the largest banks by market capitalization..
1000 3000 6000 7000 8000 11000 13000 16000
generating recurring results…
Net operating income
EUR billion, With more than 190.000 employees
serving more than
102 million customer worldwide
3. Efficiency is a strength and a fundamental
part of our business model
Efficiency Ratio vs. Peers* (%)
2011 data
Santander is the most efficient international bank in the world
4. Santander’s journey transforming its
purchasing function
Evolution to a
•
new model
Global Purchasing
•
Traditional
•
2004
• •2005-2007 2008 -
•
• Focus on price • e500 project to reduce costs • Corporate Cost & Procurement
• Distributed function • Local and Global Category structure Model
(15% purchasing perimeter) • Centralization from business units • Total outsourcing of the purchasing
• Transactional focus • Specialization of categories in function to Aquanima
• Administrative nature of resources Aquanima
• Some eProcurement • Increased online negotiations
5. Lever 1: Cost Management &
Procurement Model
Spend Request Spend Approval Forums
Budget Managed by
the CMU Head
Reserved Funds Spend Challenge Contracts, PO’s & Invoices
Demand management savings Negotiation savings
6. Lever 2: Outsourcing of the
purchasing function to Aquanima
Responsibilities Relationship model
eSourcing
Key Account Managers
Purchasing Annual purchasing plans with
Factory Contract
Management shared objectives
Corporate SLA’s
eProcurement
Global organization with local
presence
SRM
8. Aquanima is expert in cost management
with a presence in 11 countries and over 10
years of experience
UK ALEMANIA
USA PORTUGAL
• Presence in 11 countries. Corporate
ESPAÑA headquarters in Madrid (Spain)
MÉXICO
• A multidisciplinary team of more than 250
procurement specialists
• Negotiated volume exceeds 18 Billion € in
over 30.000 negotiations generating savings
COLOMBIA BRASIL of 12% (2.2 Billion €)
• Commercial model based in a percentage of
URUGUAY
CHILE savings
ARGENTINA
9. Our experience has shown us there are 4 key
success factors needed to capture long term
optimizations
SPECIALIZATION
CENTRALIZATION
METHODOLOGY TECHNOLOGY
10. We are specialists in more than 120
categories at a global level Specialization
Main categories Centralization
1145
Methodology Technology
812
527
Volume
385 NOT EXHAUSTIVE
Negotiated 336
(MM€) 296 252
139
• Deep knowledge of the supply markets
105 98 74 51 33 with proven experience – locally/globally
• Continuous standardization and
2149 optimization of specifications and
Number of
1423
596
1004 processes to optimize the TCO
negotiations 346
154
233
203
• Exchange of Best Practices among
138 100
29 26
54 industries and geographies
• Healthy debate with the business units to
increase competition while ensuring quality
11. Our disciplined approach uses several levers to
generate savings in an efficient way
Specialization
“Scientific” approach:
Define Negotiate with
Identify need
sourcing suppliers Centralization
and current
Send RFI and strategy and
situation. Award
analyze market establish RFP Rounds eAuction Methodology Technology
Establish
objectives and
collaboration
commitments
Close team work with business units: Spend Management
improvement
Process
Reengineering
Logistics Integration
Optimization Joint R+D with
• Technical specifications definition supplier
Volume consolidation
•
Spec Reconfiguration
Approval of RFQ
• Supplier participation New supplier
Global vs. Regional
Reduction of supplier
relationships
Restructuring the
development portfolio Strategic alliances
Standardization
Sourcing
• Results approval Geographical
expansion
Purchasing
consolidation Normalization
SRM: Key suppliers
development
Concentration with Volume redistribution Substitute products Supply chain
other companies Grouping with similar integration
“categories/Families”
Templates:
Best price Open
Credible market threat
• RFQ’s by category (Penalties, SLAs, Quality Benchmark
Price renegotiation
Open cost structure Spend Management
negotiations based on
measurement, etc.) “win & win” premise Innovation
• Contracts
12. Our technology creates competitive markets
maximizing savings
Specialization
Electronic catalogs:
Centralization
Methodology Technology
• Average savings
• 2011*
14,3 %
46%
9,8%
Online Negotiations:
• Understood as a key tool and the final step of a process
• Increased transparency with the supply market
• Efficient price definition process by the market with real-time information
% offline savings Online savings
13. We have significant experience in using
different kinds of online negotiations to
obtain the best results
Least complex Most complex
Type Based solely on Qualitative Complex formulas Closed Alternative award Successive
price parameters envelope scenario Rounds
Characteristics • Cost per • Technical • Use of financial • Similar to offline • Several specialists • Restrictions on
article/ weighting of models with large sealed envelope vs. generalist award depending on
reference offers (previous number of tender bidding combining diverse how the event
experience, user variables items as a single unfolds
• Simple • Large gap
assessment) supplier
formula: price • Application of between first • Market alignment
x quantity • Adding up of discounts by and second • Contract with a
supplier’s volume scales placed bidder term of one or
specific costs several years
(cost of change)
• 3- to 5-year
guarantee
Examples • PCs • Temp Agencies • Advertising • Account • IT maintenance • Maintenance of
statements in premises
• Promotional gifts • Sales force • Outplacement • Purchase of PCs
color
• Storage of
• Printed material • Lap tops • Training • Hotels
• Advertising mainframes
• Hotels • Exterior advertising
• ATMs
14. Increasing the purchasing perimeter
is a continuous and challenging task Specialization
Why? Centralization
• Sustains high average savings over time Methodology Technology
• Increases the visibility and value of the purchasing function
• Creates professional challenges for the team
Where?
• Non-traditional categories like Marketing, HR, Consultancy
• New business units like Real State Company, Leasing & Renting
• Income related categories like Debt collection
15. Success story: Marketing Media Advertising
Previous situation and strategies implemented
Customer of the financial sector with global operations
needed to optimize the contract conditions of media
advertising
Comprehensive planning and media purchasing service:
Online and Offline
Identification, evaluation and approval of media agencies in
each market
Increase competition in “certified” media agencies exploiting
the difference in fees, commissions and rappels
Results achieved in media advertising
Open and transparent category cost structure: media cost,
agency commission, Rappel
• 329 MM € negotiated
Target type weighing (Adults, Housewives,etc.) combining:
• 36 MM € (10,8%) savings
Media Mix
Prime time
• 730 negotiations
Round position
Formats
• 10 clients