Beyond purchasing

14 An inside look | Section I
An inside look:
Building internal relationships helps everyone
at Bell Canada
Programs to cut procurement
costs have a reputation in
business for falling short of
their goals. Reduced spend
by professional procurement
staff has a way of being
offset by expenses
elsewhere.
Bell Canada has been going through a
major cost­reduction exercise. Jeff Gallant,
Vice President Procurement, notes that his
function, rather than simply charged with
buying, “is a strategic driver across the
organization which has the ultimate
responsibility of being the change agent in
reducing costs.” In 2006, procurement
saved costs amounting to hundreds of
millions of dollars, and its efforts continued
in 2007.
To what does Gallant credit
procurement’s success? He explains
that “often companies do a great job of
negotiating cost savings with the supply
base but cannot materialize it in the
organization. To do so, it has to be an
inclusive and collaborative process with
other business units.”
Such cooperation must take place at
different levels. At Bell, for example, the
Chief Sourcing Officer is on the
Management Board “so he can alert the
business unit presidents, the COO, the
CFO, and the CEO, to get their buy­in at
a high level” on relevant issues
including, where needed, choice of
supplier, and to provide relevant
expertise to them.
“Another key component,” says Gallant,
“is buy­in at the working level.” Here is
where Bell’s approach is truly innovative:
once procurement is ready to
implement savings, “we develop a
detailed, analytical business case at the
business unit level, to determine each
units' cost savings.” It presents the
ongoing results of the cost­reduction
efforts monthly to the business unit
controllers, who all participate in a
Benefits Realization Council.
When a controller signs off on the
savings, as happens for about 90
percent of the reductions which
procurement identifies, “the budgets
get pulled out, and the business unit is
motivated to use the strategy.” The
procurement team assists further by
helping with change management, and
analyzing spend at the unit level.
Gallant notes that “once savings
materialize, we get good business support.”
He adds that “implementation and change
management at a local level are critical.
Financial planning and budget takeout is
critical as well to make sure that everyone
has the right incentives and is aligned.”
To foster strong relations with the
business units, procurement has
“to set expectations properly.” Rather
than being an expert in individual areas
of the company, the function can provide
market intelligence as well as “ask the
right questions.” Gallant notes that good
relationships with internal customers
mean that departments which have not
worked with procurement in the past are
now more willing to do so. The results
of such cooperation are invariably better
than working alone — for example,
his department recently reduced supplier
costs for Human Resources by
$3.5 million.
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