Innovative Purchasing Processes at Skandia
The bundling of procurement needs and e-sourcing leads to significant cost savings

Whereas in the past, each operating department took care of its own procurement requirements, since about one year, purchasing at Skandia Versicherung Management & Service GmbH has been operating as a centralized unit. Thomas Kremling, Purchasing Manager for Goods and Services at Skandia reports about the methods and results and describes what will happen in future.

The German Skandia subsidiary, founded in 1991 in Berlin, has established itself in Germany as a specialist for innovative retirement and financial planning solutions. With its comprehensive product line of investment-based individual solution concepts that address customer needs in all phases of life, Skandia feels that it is optimally positioned for further growth.

Skandia also focuses on innovation and efficient processes. Under Kremling’s leadership, the purchasing agents bundle the procurement requirements and utilize the fairpartners procurement platform in more and more categories. Whether printed materials, general office supplies and equipment or services such as translations are involved, the operating departments have, up to now, always been satisfied with the quality and benefit from the frequently surprisingly significant cost savings that amount to between 20 and 40 percent.

Today, the operating and purchasing departments work closely together. "Even during the tendering process, the operating department always remains involved on the basis of the mutually formulated requirements. The operating departments especially appreciate the personal contact with bidders during the procurement of services. That's why a shortlist of bidders and recommendations made by the Purchasing Department is always an important interim result of the tendering process. A well thought-through and succinctly formulated call for bids ensures that offers are comparable and forces bidders to bid according to specification. This increases the transparency of bids and the competition, especially in connection with a procurement platform," reports Kremling. "Normally, the operating and purchasing departments make the final decision for a bidder together."

"Our procurement process offers lots of freedom for an intense dialogue with suppliers, particularly because the basic communication in connection with tenders is handled Internet-based via fairpartners. And new ideas develop especially in connection with an open circle of bidders," explains Kremling. "Within the framework of a Request for Information, we were looking for suggestions for incentive trips and received an offer via fairpartners.com from an agency that had been unknown to us up to that time. With the positive result that the incentive turned out differently than originally planned but was conducted with great success. We liked the innovative proposed solution of the new agency right away."

"The bundling of the procurement requirements of the operating departments intrinsically offers significant cost savings potential. In addition, using fairpartners also maximizes auditing acceptability and transparency, and we greatly reduce our administrative expenses," according to Kremling. "In the meantime, we route new bidders at the point of first contact using the fairpartners platform. Our Request for Innovation is intended to get to know new bidders without much administrative effort and to explore their product offerings. The system bundles information about products and services and creative proposals according to procurement categories that are made available on the platform."

The new concept works. As the next step, Thomas Kremling plans to bundle suitable procurement needs together with the Skandia subsidiaries in Poland, Austria and Switzerland at the end of 2009 and to conduct consolidated procurement thereof via a tendering process at fairpartners. Thomas Kremling: "We expect to be able to realize significant cost savings while maintaining at least the same quality level through the larger procurement quantities and the even wider international circle of bidders."