Deploying capital 20% more efficiently

Occumen helps a global fitness organisation clarify its business requirements and processes to optimise the purchase of fitness equipment.

The challenge

The new owners of a leader in the global fitness sector had embarked on a plan to create a single, industry-leading brand across the world. Part of its vision included the transformation of the procurement approach in order to align the process and drive greater consistency across the group, access supplier innovation, improve service and reduce risk and costs.

There was a specific challenge in the fitness equipment category because procurement was taking place on an ad hoc basis at a local level resulting in the organisation paying too much, getting poor service and not gaining access to the latest technology. Even though it was an industry leader with clubs in 16 different countries, the organisation was not benefiting from either its scale or global reach.   

The solution

Occumen, a procurement focussed management consultancy, was engaged and set about gathering the views of all interested parties across the regions – both senior managers and suppliers alike - regarding the equipment that was required to replace old machines and refurbish new clubs. We worked hard to understand the full cost of ownership and the different financing and maintenance options and eventually reached a point when it was clear to everyone that a group approach to supplier management made sense.

Decisive action was then needed to get the suppliers on board as quickly as possible as there was a pressing need for new equipment in the clubs. All suppliers were therefore invited to a conference where we explained the growth plans for the business and in that context that there would be a rapid tender process for the supply of equipment over the next 12 months and then a more comprehensive global process would take place covering the subsequent 3 years.

Lower prices were a key component of the initial 12-month tender and business was awarded to the more competitive challenger brands as some of the larger brands had refused to take part believing they could still command higher prices regionally, which was not the case.

The global tender for the 3-year contract was therefore a different story with all the potential suppliers wanting to take part. The emphasis was now on innovation, added value and service as well as cost – a new lower benchmark cost having already been established by the first tender process.

Occumen built credibility and respect which enabled them to be effective in delivering very significant savings and driving change…I have described them as the procurement partner for business people

Chief Executive Officer
Global Fitness Organisation

The benefits

With all potential suppliers now willing to negotiate, innovate and engage in serious global discussions, the cost of equipment ownership was reduced by over 20%. Improved supplier relationships and greater trust between all parties led to shorter servicing and repair times with the average time to repair cut from 26 to 12 days.

Detailed analysis of suppliers meant that we were able to ensure contracts were in place to protect the interests of the organisation, guarding against any unexpected disasters and averting any potential crises.

By engaging with the key internal and external stakeholders, aligning business processes and creating a governance framework, the organisation was able to        re-establish its credibility with its supply base, which in turn raised its reputation      in the market place.

In summary the work that Occumen did changed the way the organisation viewed procurement and changed the way the suppliers viewed the organisation.

We were keen to establish strong engagement of all stakeholders from the start in order to gain their commitment and ensure we could drive the transformational change required to make this project a success

Simon Atkinson
Managing Partner, Occumen
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