How strategic sourcing is helping Inchcape to deliver cost reductions and risk-free vendor services to customers

We asked our colleague Mitul Mehta, Head of Global Procurement, how Inchcape’s Global Procurement approach is helping our customers to reduce costs and supply chain risks. Below is the response.

But before we start, what is strategic sourcing?

Strategic sourcing is a procurement process that focuses on maximising value and reducing risk through vendor partnerships. Because of the increasing need to manage cost, strategic sourcing is transforming the way businesses view buyer-supplier relationships, so here is how we do it behind the scenes:

Strategic sourcing inside a global agency

It is safe to say that cost is a very important factor for any business, especially after Covid-19, and that’s why strategic sourcing plays a pivotal role at Inchcape. With that in mind, we have a Global Procurement department, with a dedicated team of experts in strategic sourcing that is led by Mitul Mehta.

Our Procurement Managers are based in the United States, Brazil, Greece, United Arab Emirates, Singapore and India, supporting our global network in all locations where we operate. They work with Inchcape’s commercial and operations teams on a daily basis to meet customers’ requirements, whether it is to perform vetting and negotiate with a third-party vendor or to support with customer tenders.

As the Global Procurement team is not physically present in all countries we operate, they occasionally leverage Inchcape’s global network of local port agents to manage the vendor relationship. However, when it comes to vendor negotiations, it is the Global Procurement team that steps in to ensure we get the best value.

All our vendors go through a detailed vetting process and we use best in class Risk & Compliance Tool to check for any red flags, sanctions and compliance-related issues. Our compliance department plays an important role here.

If a possible issue is identified, we work directly with Inchcape’s compliance team, QHSSE department and various internal auditors. For example, if a vendor is under any trade sanction or trade control issue, the Global Procurement team will work together with the compliance team to guide them regarding what needs to be done.

As you can see, there are different departments at Inchcape involved during the process. Global Procurement goes beyond the generic procurement process to support our business and our customers’ interests.

Customer-centric Global Procurement

In everything we do, all vendors that we sign a contract with are vetted and monitored according to strict governance and compliance rules. All customers benefit from this strategic approach, from spot calls to global customers. 

Global Managed Solutions is the most comprehensive range of solutions that can be tailored to customers’ needs, from the management of their global port calls to DA management. These solutions are delivered by Inchcape’s global hub, they are powered by Optic, Inchcape’s digital port call platform, and backed by compliance, QHSSE, legal and strategic sourcing and procurement teams.

The Global Procurement team works very closely with Global Managed Solutions’ customers (global customers). They have periodic calls where they focus on the customers’ pain points, whether it is related to vendor capacity, vendor capabilities or the most common criteria of cost, where customers request that areas of spending or cost elements are looked into to find possible savings. 
 

The team helps to reduce costs in different ways:

  • Relationships and global network.
  • Volume of business and global bargaining power.
  • Long-term customer-specific contracts being led by Inchcape
  • Direct negotiations with vendors when the contract is between our customer and the vendor. In this case, we manage contracts via overall volume to negotiate price in a way that is beneficial both to our customers and the vendors
  • Direct negotiation with all performing agents required/appointed by the customer

“We also work on the feedback that is received from the customers because, at the end of the day, the people sitting on the side are the procurement team from customers, so we understand better what they are looking for in a tender. That is something we have been doing now quite frequently with our commercial team to make sure that we match or beat the rate target wanted by the customer.”

Mitul Mehta

Cost savings and transparency

Mitul and his team work on target-based savings that can vary. Every two weeks, the team will work with global customers and share tenders or invite them to attend some vendor negotiations.

It is worth mentioning here that we also have a dedicated finance team focusing on cost optimisation programmes. But let’s leave these programmes for another blog as they are an important topic all on their own.

TRANSPARENCY is one of our core pillars, so depending on the contract, we share the vendor invoices and contract to assure customers that they are not being overcharged in any way. Additionally, the customer is provided with supply chain visibility through access to third party screening and monitoring reports, among others.

Cost is important. Security is key.

As a global company, we are aware that challenges may vary from country to country and that’s why compliance is extremely important regardless of the location.

A non-compliant vendor can damage service delivery and end up causing extra costs. That’s why we have different departments (Compliance, Procurement, and QHSSE) continuously monitoring and vetting vendors.

Whatever vendors we are using, Mitul’s team ensures that they are safe and risk-free in relation to the current geopolitical environment worldwide. For example, we make sure that we don’t work with vendors who work in restricted areas,  that are blacklisted or sanctioned.

The team may get a red flag in the case of a sanctioned entity, or where the business owner is a politically exposed person or has a share in it.  Even if the vendor is red-flagged due to adverse media coverage of any kind, we may reconsider whether to use this company or not.

The Global Procurement team, together with the compliance team, will decide if the vendor is a right fit for us or for our customers. And if any concern or red flag is raised, we just prefer not to use them.

Our goal is to make sure that we have the right vendor – quality, capability and capacity – at the right price, risk-free. Mitul Mehta

The role of procurement in sustainability

When I asked Mitul what his team is working on at the moment, his answer was – supply chain sustainability.

In the coming months, the team will be working on a strategy to support the industry in reducing its carbon footprint towards becoming net zero. This is something that the supply chain can definitely help to reduce as well, in addition to reducing cost and risk. 

So, stay tuned as we expect to hear from Mitul soon on the role of procurement in sustainability!

About Mitul Mehta

Prior to Inchcape he worked in procurement for the Maersk Group, Singapore Airlines Group, Tata Motors and General Motors. He is an engineer with MBA and MCIPS Certification, a great combination of knowledge and skills that have been helping him to wisely overcome supply chain and procurement challenges.