5 November 2009 | Rebecca Ellinor

KPMG has linked up its procurement offices in the UK, Germany, the Netherlands and elsewhere. Mark Powderham tells Rebecca Ellinor how it works

Two years ago KPMG began merging the back-office functions of a string of its partnerships in Europe. Instead of each operation acting as an independent franchise under the umbrella of a global brand, it started to bring them together. The move was part of KPMG's ambition to form the largest fully integrated accountancy firm in Europe with the intention of providing a better service to clients across the continent.

Although jobs were lost in some departments as a result of integration, purchasing was a "significant exception", says Mark Powderham, head of procurement for Europe. For the function it has meant more investment and bigger savings. The UK, Germany and Switzerland were first to merge in October 2007. A year later Spain and Belgium joined, and last month the Netherlands, Turkey, Luxembourg and a group of Russian Federation countries also became part of KPMG Europe.

All nine have merged at corporate level, but the number of internal procurement staff varies between countries. The most significant development for purchasing has been the formal linking of buying teams in the UK, Germany and Netherlands.

The UK team accounts for the largest chunk of procurement spend, at around half of the total, followed by Germany and then the Netherlands.

Powderham, who is based in the UK, says: "These three procurement teams are fully harmonising, with integrated systems, process and policy. What we're doing with the other countries is sharing best practice and looking to optimise deals on their behalf."

In some cases, he says, contracts will be agreed on a European basis. Others will be national or regional, in clusters. "Sometimes markets exist that span Germany and Switzerland, or Belgium, the Netherlands and Luxembourg, that don't span the UK."

Pan-European deals for technology and travel are likely to be considered, he says, but in areas such as HR, facilities and marketing, a clustering approach is likely to be more appropriate.

Procurement was seen as a key enabler of KPMG's merger, with executives eyeing up potential savings on the firm's total €750 million (£680 million) third-party spend. The transformation has increased procurement savings from €10 million (£9 million) in 2008 to €20 million (£18 million) in 2009 with an additional €20 million of savings targeted in 2010. Purchasing has enjoyed a greater level of investment as a result.

"It has been seen entirely differently [to other functions]," says Powderham. "This has been an area of significant under-investment in the past so we've sought to invest in the breadth and depth of procurement professionalism in those European countries that previously did not have it."

Sourcing guide

To standardise procurement across the continent and "improve the quality and effectiveness of strategic sourcing activities", Powderham oversaw the development of a European strategic sourcing manual.

As well as guidance and best practice, the manual provides tools and templates to help buyers at all stages of the sourcing process.

"It's not a substitute for thinking but a set of prompts. For every activity it asks questions. It doesn't seek to give every conceivable answer - it tries to stimulate the procurement resources to think about what they need to consider."

Not only does it ensure all angles are covered, it improves efficiency. "Having templates and processes removes uncertainty and having to draft documents from scratch so you can focus on added value," Powderham says.

A large piece of work was the development of standard forms of contract. "We used to have one rather clumsy set of T&Cs we would apply to all kinds of contracting situations. As part of this exercise we developed about a dozen standard forms with different start points for different contracting situations - so minor services, major complex services and outsourcing, IT software, marketing and recruitment.

"That's been a huge success and has sped up delivery because we're starting each contract discussion at a more appropriate place and dropping the closest template to our requirement into the request for proposal and saying 'you're accepting all of this as part of your response'."

Training on the tools and templates contained in the manual is a constant process. "We take a chapter each month and look at what the key issues are and how we manage them, to keep it fresh in people's minds."

Systematic support

As part of the wider European integration, KPMG is putting new IT infrastructure in place. This includes a common SAP system, a pan-European voice and data contract and a single data centre.

In terms of procurement, the manual was launched alongside a new e-sourcing platform, which enables buyers to see the status of projects at a glance.

Buyers can now access live "pipelines" and dashboards as soon as they log on. And Karsten Ketelsen, the KPMG account manager at SAP, believes the "highly developed use of the tool" makes KPMG Europe one of the most innovative of its customers in Europe.

Powderham says: "The system gives us full visibility over all the live projects and contracts and reports, and the compliance of these contracts and projects at any moment in time. If projects have not been updated recently or are missing data, if contracts have gone beyond an end date or signed copies have not been uploaded - the system flags it all up."

The whole change programme wasn't just about aligning the way different offices in Europe operated, he says: "We used Europe to sort out a problem we'd never tackled in the UK. We have a split location team [London and Watford]. People are recruited from all over, they have different previous employers and tend to come on board with preferred templates and processes. In the absence of anything formal, people used to do things in slightly different ways.

"This project enabled us to all speak one language, use a single set of systems, processes, tools, not just different locations in the UK but across multiple centres."

Mike Blake, KPMG's head of infrastructure in the UK, believes the changes have made a considerable impact. "Effective procurement practices depend upon a clear and comprehensive methodology which is understood and followed by all budget holders," he says. "The new rigour, consistency and transparency of our process have led to significant efficiencies with a real impact on the bottom line."

Skills development is a big part of the future. External client-facing professionals in KPMG's procurement advisory team are trained through a dedicated academy, and Powderham is also considering whether his staff might be able to receive the same or similar training. He says it's all part of a desire for the internal procurement team to be more joined up with the outward facing buyers, including the possibility of individuals moving between the two teams.

He adds: "We've had a history of supporting each other on specific projects on an ad hoc basis, but we're looking at strengthening the relationship between the two."