Wolseley UK Ltd Gains Control & Visibility of Spend Across 1,500+ Locations
One of the world's largest building material distributors
uses PROACTIS to achieve greater spend control and
visibility.
Profile
Wolseley UK Ltd is the UK operating subsidiary of Wolseley PLC,
one of the largest distributors of building products in the world.
Wolseley UK operates an extensive nationwide network of over 1,500
branches under brands such as Plumb Center, Build Center, Parts
Center, Pipe Center, Drain Center, Climate Center, Electric Center,
BCG, Unifix, and others.
Wolseley UK (including Ireland) has revenues of over £3 billion,
an employee base of over 13,000 and an annual indirect purchasing
expenditure of over £200 million.
Challenge
When all of Wolseley's UK businesses were combined into Wolseley
UK, the approach to the procurement of indirect products and
services was anything but automated or consistent. Often, employees
would simply find a supplier in the Yellow Pages, pick up the phone
and order what they wanted. Finance did not know what commitments
had been made until the invoice arrived. Purchasing had virtually
no ability to consolidate or analyse what was bought or from whom.
Maverick spending was the rule, rather than exception.
When Zoe Matsell joined Wolesley as Head of Indirect
Procurement, it was clear a more structured approach was needed:
"We had little ability to control when or where money was being
spent - the process was almost completely without
governance."
An audit of the indirect Procurement process performed by KPMG
clarified the situation, identified the risks to the company, and
outlined the opportunities a properly controlled process would
present. Based on that information, Matsell summarised the business
case for an electronic procurement system and gained management
authorisation to proceed.
Why PROACTIS?
Wolseley first looked at the capabilities of their current ERP
system (Oracle) as well as those of their planned future ERP system
(SAP). While both supported direct product procurement, neither
provided what was needed for indirect goods and services
procurement - a very different process. After looking closely at
several alternatives, Wolseley selected the PROACTIS purchasing
solution as the path forward.
"There were a number of reasons why we picked
PROACTIS," says Matsell. "We could see that it was well
conceived and provided all the capabilities we needed. The
workflow, authorisation rules, cost allocation methods, and other
capabilities were all very configurable, so we knew we could tailor
it to our organisation. Just as importantly, it was clearly an
intuitive system we felt our employees would be willing to adopt
and use."
Another advantage of PROACTIS was lower total cost of ownership.
Because integration with existing financial systems was reasonably
straightforward and no major customisation was required, the
overall cost to deploy the system was lower than most of the others
while providing greater capability.
Wolseley opted for PROACTIS subscription-based hosting, which
aligned expenditures with the anticipated process savings. Using
PROACTIS, Wolseley projected savings of over £2.5 million after
system costs in the first three years, just as a result of improved
governance and visibility.
Finally, Wolseley's people were impressed with how well PROACTIS
understood their needs, and with the plan they developed for
Wolseley's large-scale deployment.
Results
It took only a few months to configure the system to match
Wolseley's organisation and policies, then just three months to get
the first department up and running. Full-scale roll-out proceeded
from there. As of this writing, full deployment across 1,900+ users
and 1,500+ locations is nearly complete. In addition to realising
the control and consistency of process Matsell and the company were
after, a number of functions have been streamlined, and visibility
of purchase activity has taken a big leap forward.
The supplier base has been significantly reduced. Matsell's team
consolidated the base of over 26,000 suppliers to just over 5,000
for setup in the new system. Though additional suppliers will be
brought on board as needed, sourcing rules and PROACTIS controls
will prevent uncontrolled rebuilding of that base.
Various PROACTIS features have been used to make it easy for
employees to buy from preferred suppliers. For instance, PROACTIS
'punch-out' capabilities allow users buying stationary products to
link directly from PROACTIS to the Lyreco website, select items
using the shopping cart, and pull the information back into
PROACTIS for normal processing. Such capabilities make buying
through the new system as easy as it was before, while applying all
the desired controls. Another benefit of the punch-out approach is
that it completely eliminates the need for catalogue management - a
big benefit within the Purchasing department.
The load on the Accounts Payable function is now being reduced -
and will be dramatically reduced when legacy procedures are fully
eliminated - because the great majority of invoices are
automatically matched to purchase orders already in the system, and
exceptions are electronically routed to the originator for
reconciliation. In addition, invoices are now being scanned using
OCR technology to automate invoice entry.
Financial visibility is vastly improved. Before, Finance knew
nothing about purchase commitments until invoices were received,
approved and posted - sometimes months after the purchase was made.
With PROACTIS, purchase commitments are visible as soon as items
are ordered and an approved payment file is sent to the corporate
finance system on a daily basis.
The other advantage of capturing all purchase activity
electronically is that a detail history is now being accumulated.
This information gives the Purchasing department the information
they need for effective spend analysis, sourcing, and contract
management.
In summarising her view of the PROACTIS solution, Matsell says:
"PROACTIS has provided us with exactly the framework we needed
to gain control and visibility of indirect spend across our 1,500+
locations - we're very happy with the results."
