SUCCESS STORIES – GLOBAL STRATEGY, LOCAL PROCUREMENT: Saving 43.4% in Latam
An expansion in Latin America is usually staggered by country, leading to very strong growth in the first few years, whether through incorporation, the acquisition of small local businesses or the invaluable help of expatriates. During this first period of expansion the service and the establishment of an appropriate telecommunications network is usually a priority, leaving costs and planning in the background.
In this case, although the first businesses in Latin America had started 20 years ago, the big expansion took place during the last decade. With offices in Argentina, Brazil, Chile, Colombia, Costa Rica, Honduras, Mexico and Peru and with more than 5,900 lines of Mobile Telephony, Fixed and Data Network we found that our client had 31 operators and reached the 1,700 annual invoices.
In most cases, the procurement of the various telecommunications services had been phased in to meet the needs as they appear. Without any planning, the criteria for selecting the operator were changing according to circumstances: coverage, data flow commitments, speed of implementation, subrogation of contracts, attractive terminal offers, maintenance of the former operator of the new employee or other interests.
During the first 6 weeks, Lean Focus was requesting invoices from offices and operators and entering their details mostly manually or semi-manually (OCR), as invoices were only obtained in electronic format in 17% of cases.
Once the services and their traffic were introduced, an exhaustive characterization of the sample was carried out, accompanied by interviews with the main telephone managers of each country.
As a result of this characterization and its analysis, opportunities for short-term optimization were identified, the implementation give an initial saving of 9.2% prior to the request for a bid.
While the initial goal of the customer was to make an international bid request by concentrating the entire business on two sole contracts of Mobile Telephony and Fixed Telephony and Data Network, it was finally decided to open the scope to both international and local operators.
A clear bidding strategy was also defined, setting out global recruitment criteria in order to unify criteria and simplify administrative tasks. Within this strategy it was decided that the tasks of control, management, conformity of invoices and claim of errors would be carried out from Spain, still being local operators, following the methodologies and processes that were being done with the national operators.
On the other hand, meetings were held with the supervisors of the main suppliers previously contracted, as well as with the key operators in each country.
When drawing up the invitation to tender, account had to be taken of the particularities of each contract and of each country and of the commitments to the different operators for each of the lines, their penalties, the characteristics of the same service in each country, the operation of flat tariffs, the commitments to cover each operator, the application of taxes and taxes, the operation of national traffic (assessing the existence of air in incoming calls) and roaming or terminal and repair service policy.
Months after the launch of the bid request and after several rounds of negotiations 3 global contracts were concluded for several countries and 9 local operators were chosen.
Although the introduction and portabilities were made by country taking into account the completion of each contract, in many cases it was due to pay penalties.
As a result, in addition to better service delivery in all countries, savings of 34.2 per cent were achieved through new systems contracts.
- Optimization savings 9,2% 9,2%
- Savings on contract negotiation 34,2% 34,2%