Pegasus Global has assisted numerous enterprises across a wide variety of industries – (public and private – industrial and services) – in achieving world-class Procurement, Finance, and Supply Chain functions and substantial cost reductions. We feel the following examples are particularly relevant.
Problem: A major consumer products company, one of the largest buyers of advertising and promotional print material, was experiencing large cost overruns, delayed delivery, and poor quality in purchasing outside print. The company was planning the largest ever promotion and rightly felt print would be an operational bottleneck and cost hindrance. Additionally, the print process was extremely long and required multiple change orders. Thus the contracting for print was often an emergency last-minute buy that did not allow time to bid the job. Pegasus Global was hired as the exclusive outsourced manager for the entire purchasing aspects of the promotion, including the purchase of all print materials.
- Solution: Pegasus Global reverse engineered the print process into separate component parts and thus was able to gain early visibility of requirements. This allowed the major components of the print RFPs to be competitively bid on a separate basis. Multiple bidders and the elimination of sole source suppliers not only reduced the expected cost by over 30%, but also decreased significantly delivery times while allowing greater flexibility in changing design.
- Problem: A major insurance company ran out of the required forms to write year-end annuities. The company spends over $25 million annually on forms plus a substantial internal cost to store, update, and distribute them . Not only is this a costly operation but also the lack of forms control and compliance with legal (mostly State) regulation put the company in jeopardy. Pegasus Global was hired to correct the problem.
- Solution: Working with a business forms publisher, Pegasus Global created and implemented an electronic commerce forms control program. The required inventory of required forms was recreated on an extranet site. The “mask” for the form insured legal and corporate compliance while allowing the field representatives to individualize the forms to meet site and customer demands. The forms were then printed locally, including multi-color and multi-page sets. This allowed the company to reduce the cost of forms and forms management by over 50% plus speed delivery and insure regulatory compliance.
- Problem: A major petrochemical company spends over a third of its repair budget with external contractors, who maintain their operations. The contracts average over 100 pages of detail. Each service purchase was treated as a stand-alone document. The administrative task of contracting limited the company’s efforts to competitively source repair contracts. Additionally, the company had invested millions in a computerized purchasing system and wanted to use that system for service contracts. Pegasus Global was engaged to improve the service contracting process and to develop methods to include those purchases on computerized purchasing system.
- Solution: Pegasus Global was able to develop a standard service contract that was 80% common to all purchases; thus less than 20% of the contracts documents needed to be customized. Further the characteristics of the variables were developed into a decision tree matrix that allowed the entire contract to be broken-down into individual critical elements and negotiated and evaluated separately. It also allowed the individual service contracts to be included in the computerized purchasing system.
- Problem: A major conglomerate spends over 20% of its entire procurement budget on services contracts. Those contracts range from advertising services to janitorial services. Most contracts were sole sourced, multi-year evergreen contracts. The conventional wisdom was that specialized contracts, for example; legal, insurance, advertising, print, and others, were too specific to be competitively sourced. Pegasus Global was commissioned to develop and implement a procurement process that competitively bid these contracts.
- Solution: Pegasus Global reversed engineered and broke-down all contracts. It was discovered that 40% of all contracts conditions have measurable standards that can be competitively bid. Developing selection criteria that included comparisons and competition, the company renegotiated all major contracts and required that all future contracts follow these guidelines. The company saved millions of dollars.