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Using intelligent procurement to drive savings and efficiencies.
Centrica is a leading British multinational energy company, supplying energy and services to over nine million residential and business customers, mainly in the UK and Ireland, through brands such as British Gas, Bord Gáis and Centrica Business Solutions.
The business employs over 23,000 people worldwide - with offices throughout the UK, Ireland, North America and the rest of the world. Business operations are supported by around 7,500 engineers and technicians who regularly need to purchase items in order to support their customers.
The procurement team is based in the UK and manages third party spend as well as the property portfolio and management. Centrica has worked with Amazon Business since 2020 to simplify their tail spend procurement processes and build a digital-first central buying solution.
Centrica is a business with a long history. Founded over 200 years ago, it has expanded through acquisitions, resulting in a build-up of complexity and intermediaries within their purchasing processes. As the buying landscape became progressively more cumbersome, with buying channels and options available varying depending on business unit and location, the Chief Procurement Officer Peter Sowrey and the Procurement Strategy team, led by Alexei Burns, saw the need to simplify.
Recognising the disparity from an end user experience perspective between B2C and B2B, the team looked to how they could reduce bureaucracy and create an efficient and effective transactional process. The need was for a consistent and intuitive buying environment that could be founded on technology and allow users to obtain goods and services in a fast, frictionless process.
“We recognise that Procurement are here to deliver commerciality whilst protecting against risks but also, with the right mindset and tools, we can do so much more for our customers and colleagues.”
— Alexei Burns, Group Procurement - Strategy, Planning & Performance, Centrica
The mission was clear – to industrialise procurement processes and systems to make them scalable; allow them to interface with other technological processes and; most importantly, ensure they drive towards precision. In order to achieve this, the team set goals to:
Keeping pace with technology solutions is a challenge for many large enterprise organisations and Centrica was no exception. As Alexei Burns, responsible for strategy, planning and performance within Group Procurement says: “Technology is allowing procurement to rebrand and re-establish itself by focusing on strategic value creation, innovation, sustainability and even wider organisational strategy.”
Procurement as an industry now recognises the need for technology to help propel their teams forward, increasing their effectiveness and ramp up value output on an exponential scale. However, historically functional units such as procurement lack the resources to stay ahead of the technological curve, which often results in poor user experience and a lack of support and adoption.
The challenge for Centrica was to build the right foundations in terms of technology and solutions. They needed products that the procurement team could rapidly build, test and scale. The use of AI and Machine Learning (ML) technology are now being applied to all aspects of procurement whether it’s market-scanning algorithms utilising ML to identify new or emerging services and suppliers, or online stores that guide users to great outcomes using Natural Language Processing and AI.
“Embedding Amazon Business into our Ariba buying environment allows for e-invoicing which enables Centrica to have an end-to-end transaction model. We work with partners such as Amazon Business to help us transform into a digitally-enabled procurement function.”
— Peter Sowrey, Chief Procurement Officer, Centrica
In 2019, Centrica began the journey to reshape its procurement function to create a leaner, more agile function, underpinned by digital solutions. With a reduction in team size of 60%, they understood the need to simplify and scale in order to deliver not only for the present but also for the future within the digital age.
The foundation for this was to create a centralised platform that linked the buying environment to their source-to-pay (S2P) system. As Peter Sowrey, Chief Procurement Officer says: “Embedding Amazon Business into our Ariba buying environment allows for e-invoicing which enables Centrica to have an end-to-end transaction model. We work with partners such as Amazon Business to help us transform into a digitally-enabled procurement function.” This was the glue to bring together other solutions and applications to create a rich and diverse buying environment.
By creating this centralised buying environment, users could easily find the products they needed as well as understand easily how to use the interface. With a mindset of ‘simplicity’ and ‘don’t make me think’, the procurement team worked hard to ensure all users could buy what they need, when they need it. To prevent rogue spend, the new processes also cater for when users cannot find what they need – by facilitating purchasing through Amazon Business and capturing the demand for future purchasing.
One of the biggest successes in this common buying environment has been the integration of the Amazon Business online store, implemented in early 2020 and now with over 2,600 users across the business. The familiar buying experience helped the rollout and within the first month, there was an increase of 800% in traffic into the Amazon Business environment.
Implementing Amazon Business has helped Centrica aggregate low-value, high-volume spend into a single solution. This has in turn freed up time to focus on their core business and key suppliers. As Vincent Gautheron, Head of Services Portfolio says: “Amazon Business helps our colleagues and stakeholders find what they need fast, allowing them to focus time and effort on their role, not complex processes and policies.” The implementation also scored other wins: against a set target of 65% of catalogued spend by PO volume, they hit 77%. There was also a massive 600% reduction in purchasing journey time for users.
Amazon Business complements Centrica’s overarching strategy of releasing capacity on the ‘tail’ spend and moving away from the more transaction purchasing of GNFR (goods not for resale) and focusing on unlocking value with their key partners and suppliers which, ultimately, increase procurement’s strategic importance to the business. The next steps in the journey with Amazon Business are to increase adoption and to expand it in new areas where it can drive value. Developing the usage of AI/ML technologies will help Centrica drive increased cost and efficiency savings through their reshaped procurement function.
“Amazon Business helps our colleagues and stakeholders find what they need fast allowing them to focus time and effort on their role, not complex processes and policies.”
— Vincent Gautheron, Head of Services Portfolio, Centrica