Unlocking procurement excellence through spend optimisation

Procurement professionals face mounting challenges, from inflationary pressures to tighter budgets. This widening gap creates the critical need for organisations to do more with less, prompting procurement teams to rethink strategies and streamline processes adopting innovative tools.

At the heart of these efforts is spend optimisation, a key pillar of effective procurement. By reimagining how organisations manage spending, procurement can transcend its role as a transactional function, becoming a strategic powerhouse instead. In this article, leaders from three distinct industries offer practical examples of how their businesses have successfully implemented spend optimisation strategies, highlighting the importance of collaboration, innovation, and adaptability.

Enhancing procurement processes with managed spend at AXA UK

AXA UK, a leading insurance provider, recently undertook a comprehensive overhaul of its procurement processes by implementing a managed spend strategy. Prior to this transformation, procurement activities were fragmented, with employees operating under separate accounts. This lack of centralisation not only obscured visibility into spending but also posed challenges in ensuring governance and compliance.

AXA UK's shift to a unified procurement platform provided immediate and tangible benefits. A key enabler of this transformation was the adoption of a punch-out catalogue, which centralised procurement activities and offered improved control and transparency over tail spend. For example, purchases like hard drives and memory cards, previously made outside company governance and creating security risks, are now managed within strict approval workflows. This system automates approvals for transactions below £150 and escalates costlier purchases for managerial sign-off, streamlining compliance without adding administrative overhead.

Beyond cost control, the new system at AXA UK delivers operational efficiencies and enhanced sustainability tracking. With access to real-time data, the company can now generate year-end reports seamlessly, addressing regulatory requirements with ease. The increased visibility also supports more strategic partnerships, such as an ongoing pilot of IT vending machines stocked with items like chargers and keyboards. This innovative solution not only simplifies procurement but also enhances the user experience for staff, reflecting AXA UK's commitment to a user-focused approach.

The results speak for themselves. AXA UK has achieved cost savings of approximately 5% on commonly purchased goods, along with additional savings negotiated through its strengthened partnership with its procurement marketplace.

Tackling tail spend with technology at Enel

For multinational energy company Enel, managing procurement across diverse operations and geographies presents unique challenges. Tail spend, or low-value purchases spread across numerous suppliers, is particularly complex but rife with opportunities for improvement. At Enel, tail spend represents €1 billion of its €13 billion annual procurement expenditure.

Enel approached the issue of tail spend by first prioritising visibility and control. By adopting a digital purchasing platform, the company enabled employees to make compliant purchases with speed and ease. A compelling example of this transformation involves sourcing essential items like sunscreen and vitamins for plant workers operating in extreme heat. Previously, staff relied on unqualified local suppliers, creating inefficiencies and compliance issues. With the new system, such items can now be ordered via an approved platform, ensuring 24-hour delivery and alignment with company policies.

To further optimise tail spend, Enel established a dedicated "Fast Track" team to assist with non-standard purchases and implemented AI-powered screening tools. These technologies help employees identify catalogue matches instantly, reducing the workload for human teams and enabling faster, more efficient purchasing. Additionally, Enel's commitment to sustainability is evident in its focus on buying eco-friendly products and prioritising local suppliers wherever possible.

Enel’s strategy emphasises the importance of flexibility and visibility. By targeting fragmented spending with scalable digital solutions, the company has transformed a historically overlooked area into a significant source of value creation.

Streamlining procurement for schools at the Harris Federation

The Harris Federation, a London-based multi-academy trust managing 55 primary and secondary schools, faced challenges typical of decentralised organisations. Individual schools often operated independently, purchasing from a vast array of suppliers. This lack of coordination led to inefficiencies, compliance risks, and missed opportunities for cost savings.

To address these challenges, the Harris Federation centralised its procurement activities through a unified digital platform. Leveraging a public-sector framework, the trust ensured its processes met stringent compliance standards while simplifying procurement for schools.

A notable outcome of this transformation is the significant reduction in supplier numbers, from 4,700 to 2,500. Consolidating supplier relationships has provided better visibility and control while unlocking volume discounts and rebates. One striking example involves the organisation’s mobile phone contract; costs dropped from £18,000 to just £3,000 per month by renegotiating terms and leveraging collective purchasing power.

Operational savings translate directly into greater resources for students. For instance, by enrolling in a premium membership subscription for deliveries, the Harris Federation saved £124,000 last year alone. These cost efficiencies allow the organisation to reinvest in critical areas like school trips, uniforms, and classroom resources.

The Harris Federation’s approach underscores the transformative potential of collaborative and strategic procurement. By aligning centrally while ensuring schools retain a voice in decision-making, procurement has shifted from being seen as a transactional function to a strategic partner delivering tangible, student-focused outcomes.

Key takeaways for a modern spend optimisation strategy

Spend optimisation is more than a cost-reduction exercise; it’s a pathway to unlocking broader organisational value. The experiences of AXA UK, Enel, and the Harris Federation illuminate several key principles for modern procurement leaders seeking to drive change:

1. Centralisation enables control: Unified procurement platforms, like those used by AXA UK and the Harris Federation, improve visibility, enhance compliance, and unlock cost savings.
2. Technology fuels efficiency: From AI-powered screening tools at Enel to AXA UK’s IT vending machines, technology empowers procurement teams to streamline processes and focus on strategic priorities.
3. Collaboration drives innovation: Whether negotiating supplier discounts or piloting new solutions, strong partnerships between procurement teams and suppliers deliver mutually beneficial outcomes.
4. Data is a strategic asset: Real-time access to procurement data, as seen at AXA UK, reduces administrative burdens and enables data-driven decision-making.
5. Local impact scales global change: The Harris Federation’s approach demonstrates how streamlining procurement not only saves money but also creates a positive ripple effect, benefiting individual schools and, ultimately, their students.

Procurement teams must be agile and responsive to an environment where budgets are stretched thin, yet expectations remain high. By adopting strategies centred on collaboration, innovation, and data insight, organisations can transform procurement into a strategic enabler that does much more than manage spend.

The road to procurement excellence is never entirely smooth, but as these organisations have shown, the right approach can transform challenges into opportunities, setting the foundation for sustainable growth and long-term success.