The finance industry has certainly felt the impact of technology over recent years. With security always an important priority for banks and building societies, the sector has had its work cut out to embrace increasing customer demand for online and mobile banking. For any business looking to embrace digital transformation, however, it’s not just the front end, customer-facing systems that need to change – it’s the back-office processes, too.
Coventry Building Society has grown significantly since the 2008 global financial crisis and today we manage £43bn on behalf of 1.8 million members. Over the past few years, this growth has seen us undertake a number of transformative projects – all supported by procurement.
Not wanting to be left behind, my remit on joining the business was to lead a transformation programme that would radically overhaul every aspect of the organisation’s approach to procurement. We identified the need for a step change across the business in terms of the value placed on, and the understanding of, procurement’s role. We also wanted to achieve an array of benefits including reduced costs, greater understanding and oversight of supplier risk, and stronger relationships with our suppliers.
To modernise our procurement function and move away completely from manual processes, we quickly identified the need for an e-procurement solution that would give our buying teams access to the products and services they were looking to buy from approved suppliers at agreed prices. We also sought to automate all orders and invoices to mitigate user error, as well as save time and resources. As the business was growing, meanwhile, so was the number of suppliers we were working with. As such, we needed to improve supply chain management from initial tender process through to supplier engagement and management.
We could see e-procurement would help our organisation make informed decisions, drive improved buying behaviours, increase controls, mitigate risk and ultimately reduce our costs. It would also enable us to adopt a category-level approach to supplier sourcing. We wanted to become a ‘customer of choice’ for our suppliers to help forge strong partnerships with our supply chain and realise mutually successful outcomes.
We also realised that adopting any new technology would be a big culture change for our employees, so it was important to involve all key stakeholders in the implementation process. We made training a priority for all users and communicated the benefits of the new approach to procurement teams along the way.
As we operate in a highly regulated industry, the organisation has previously managed all technology projects in-house. We have a very low tolerance of security risks, so we were cautious when looking for an e-procurement solution as many are hosted in the cloud. However, we were quickly reassured that the cloud was a secure place to host our noncore business processes. We chose Source-to-Pay (S2P) software from Wax Digital as it provides secure and seamless integration with our ERP system.
S2P was implemented for 400 users at six of our head office locations. We quickly identified several key processes to address as part of our transformation:
We needed to eliminate manual, back-office processes and replace them with more structured and auditable end-to-end purchasing. We contacted each business function to discuss their procurement practices and ensure any new processes would meet their needs. Then, we designed a new core set of purchasing best practice principles that web3 would control for the business to use. For example, all new supplier requests would need to be assessed and all purchases above a certain value had to be reviewed by procurement.
As part of the configuration of web3, our purchasing criteria was implemented as system controls that could not be circumvented by any single user. To help with the transition between the old and new processes, we held a series of workshops to communicate the benefits of the new system and ensure users fully understood its capabilities. In addition, we created a helpdesk to provide support and any additional training.
Internally, our new S2P solution became known as Coventry Online Goods and Services (Cogs) and we were keen this transformative solution would enable us to work with third parties in an environment that would provide a step change in control, management information and oversight. As this was a completely new way of doing things for us, the culture of the previous manual purchasing practices also needed to change to align with best procurement practice.
A key factor in ensuring the success of Cogs was the impact it would have on our engagement with third parties during a competitive tender exercise. To help the process, the procurement team created external support materials to facilitate a simple working environment.
During the system design phase, we worked closely with the legal department to ensure the contract management module design worked for our needs. This included capturing all the data fields required by our legal team and the wider business to enable informed decision-making.
At the start of this project, the procurement team worked with the wider business to define the information they would need to report on for purchasing, sourcing and contract information. The reports could then be scheduled to be automatically dispatched to the business on a regular basis.
To take full advantage of our new system and to help eradicate our previous culture around purchasing, we held a series of training sessions with requisitioners, purchasing and contract approvers, as well as our finance, legal and procurement staff.
Cogs has certainly helped us implement best practice purchasing. It ensures strict adherence to our purchasing policies and helps mitigate any procurement, contractual and information security risks. Our new approach has delivered a host of benefits to the entire organisation and we now have an unprecedented amount of management information available at our fingertips regarding third-party spend and contracts.
Our new, structured approach to purchasing and sourcing third-party services enables us to enforce a single procurement policy. It also provides a central location for all third-party information, saving time and resources on finding essential data such as contracts or supplier spend.
Cogs has also provided a foundation to launch supplier relationship management and a greater focus on corporate social responsibility. These elements are captured during the third-party onboarding process and help us manage and control any risk at the appropriate stages of the supplier life cycle.
We learned many lessons during the implementation of our S2P system. Cogs was the first cloud-hosted solution to be implemented by Coventry Building Society and it is now considered as an enabler to working smarter with new technologies.
Stakeholder engagement was also a crucial success factor. By involving key people from around the business at each crucial planning stage, we could ensure we met all their needs and they quickly realised the benefit of having so much management information at their fingertips. In fact, our CEO acknowledged the success of our project and said procurement was committed to doing the right thing for the organisation, our members (as our owners) and our supplier customers.
Also, it is important not to underestimate the value of communication and training. Going from manual to digital processes is a huge culture challenge for any business. The training helped ensure users were comfortable using the new system and fully understood the benefits it would deliver to the finance, management and procurement teams, as well as the wider business.
Our new approach to procurement has also enabled us to provide added value for our members through ethical and efficient sourcing and purchasing. Web3’s e-sourcing module allows for fair and transparent sourcing and helps buyers achieve value by obtaining the right service at the right price. This has helped us to remain the most cost-efficient building society in the UK, with a cost to mean asset ratio of 0.46%.
The purchase-to-pay module has automated and simplified invoice processing for our finance team, while the supplier relationship management module facilitates regular performance reviews and the proactive renewal of supplier contracts.
The implementation of this new system has enabled not just our procurement function but the entire organisation to deliver better transparency on costs. This has been a significant enabler to making informed decisions that are right for the organisation. Moving from a heavily loaded backend process to best practice procurement has been vital to the success and transformation of procurement at Coventry Building Society.
Rachel Lasisi is head of procurement at Coventry Building Society.
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.