Halifax Bank of Scotland (HBOS), the UK’s largest mortgage lender, says it has made substantial savings in procurement by creating a central repository for supplier data.
HBOS was formed in September 2001 from the merger of the Halifax and Bank of Scotland. The merger was intended to generate £300 million (€475m) in cost savings, a substantial proportion of which would be created by combining the procurement power of the two banks.
To achieve these savings, HBOS has built a supplier relationship management system, based on extraction, transformation and loading (ETL) tools from Ascential, a data warehousing system from Kalido and reporting and analytics tools from Business Objects.
By extracting supplier data from the many disparate procurement systems in use across the newly merged organisation, HBOS gets a consistent view of procurement operations, enabling it to see consolidated spend per supplier and commodity across the entire business and its subsidiaries.
Using the Business Objects system, procurement managers and buyers can analyse and manage supplier performance.
Ian Taylor, procurement director at HBOS, says the project was completed in three months and has already delivered measurable benefits.
Prior to the merger, for example, there were more than 17,000 supplier account codes residing on both companies’ procurement systems. This has since been condensed to 142 by eliminating duplicates through the data cleansing process. HBOS has also reduced its supplier database from 26,000 to 20,000.
HBOS has a total procurement spend of more than £1.7 billion (€2.7bn) a year, covering everything from company cars to legal services and stationery. Having such a complete, consolidated view of all procurement data across such a large organisation is rare, believes Taylor.
“Sometimes procurement decisions can be based on gut feeling,” he said. “With this system, we can see who else in the organisation is spending money with the same suppliers and leverage this to reduce costs.”