Summary+ Analysis+ Reccomment

18:38 Thu 10 Mar 54% Q AA 1 ke Case 14-2 Marc Biron MARC BIRON "I want you to see how supply can add value to our global marketing spend. You've got a couple of months come back to me with a plan." Mare Biron, supply manager at BCI, one of the world's largest financial institutions, headquartered in Paris, France, pondered the new assignment just given to him by Pierre Jardin, the vice president of supply at BCI BCI BCI, started as a small commercial bank over a hundred years earlier, had grown over the years to offer a large variety of financial services, including commercial and retail banking, asset management, and retail and wholesale insurance. Over the past two decades, BCI had expanded its international presence significantly by acquisition of regional financial institutions in all major countries around the world. With revenues in excess of $200 billion a year, BCI was considered a major global giant the industry SUPPLY AT BCI Until five years ago, supply at BCI had been decentralized with each local or regional business unit responsible for managing its own supply requirements. A review of supply by a major consulting firm pointed out that a centralized supply function might be able to achieve considerable savings by consolidating world requirements and bringing professional supply expertise to the acquisition of BCI requirements. For example, the consultants pointed out that in their estimate IT expenditures with suppliers might exceed $6 billion per year and that major improvements in process and spend should be possible. BCI's senior management board followed the consultant's advice and hired Pierre Jardin, who had managed the supply function at one of BCI's competitors, to establish a central procurement organization. Pierre had personally started on the IT spend in Europe, while building up a group of supply professionals at head office. In the first two years, Pierre had succeeded in page 434 saving about $1 billion on Europe's IT spend with suppliers, and he then hired Mare Biron to take over IT acquisition. Having spent three years in IT supply worldwide, Marc had learned how each of the international business units operated. He was also well aware that business unit managers prized their local independence and were wary of head office involvement in their units. Nevertheless, Marc was successful in negotiating IT supply contracts that provided an additional S1 billion in annual savings. THE NEW BCI PRESIDENT Two years ago, a new president took over at BCI. With a strong marketing background, the new president insisted on worldwide brand recognition for BCI, with all business units displaying the corporate logo in all of their communications, promotion, and advertising. In addition, a major increase in marketing spend was initiated to grow the brand. For the first two years, there was no supply involvement in any country on the media spend as local and regional marketing managers had free reign on how to spend their budgets. MARC BIRON'S ASSIGNMENT Pierre Jardin had made reasonable progress in improving BCI's spend with suppliers for certain categories. In addition to the IT spend on hardware, software, and IT services, he had made progress in increasing supply involvement in corporate travel, fumiture, and paper purchases. In each category, resistance from local managers with strong preference for local and, in many cases, multiple suppliers had been strong. Aware that marketing's spend was large, although Pierre did not know the exact amount, he decided that this category might represent an opportunity for the supply function. Not only might BCI achieve considerable savings, but here was a category spend where, even in those business units that had a local supply manager, there had been no supply involvement at all historically. Therefore, working with and through local supply managers was not even an option. Although Pierre was reluctant to pull Mare Biron out of his IT assignment, he felt that Mare had the international experience, skills, and personality to tackle marketing's spend as a category. He, therefore, called Mare into his office and explained why he wanted Marc to drop his IT work and take on the marketing spend challenge. He gave Mare two months to come up with a plan. THE MARKETING SPEND Marc Biron had no marketing spend experience. He agreed with Pierre that this category was one of BCI's largest spends and if IT experience was any indicator, potentially an area of major savings opportunities. He knew that this was a major test for him and that success in this task would impact favorably on his future career. On the other hand, finding a successful way of gaining meaningful involvement for supply in this category would be difficult. He wondered how he should use the next two months that Pierre had granted him to come up with a plan and what that plan would be w 433/558 18:38 Thu 10 Mar 54% Q AA 1 ke Case 14-2 Marc Biron MARC BIRON "I want you to see how supply can add value to our global marketing spend. You've got a couple of months come back to me with a plan." Mare Biron, supply manager at BCI, one of the world's largest financial institutions, headquartered in Paris, France, pondered the new assignment just given to him by Pierre Jardin, the vice president of supply at BCI BCI BCI, started as a small commercial bank over a hundred years earlier, had grown over the years to offer a large variety of financial services, including commercial and retail banking, asset management, and retail and wholesale insurance. Over the past two decades, BCI had expanded its international presence significantly by acquisition of regional financial institutions in all major countries around the world. With revenues in excess of $200 billion a year, BCI was considered a major global giant the industry SUPPLY AT BCI Until five years ago, supply at BCI had been decentralized with each local or regional business unit responsible for managing its own supply requirements. A review of supply by a major consulting firm pointed out that a centralized supply function might be able to achieve considerable savings by consolidating world requirements and bringing professional supply expertise to the acquisition of BCI requirements. For example, the consultants pointed out that in their estimate IT expenditures with suppliers might exceed $6 billion per year and that major improvements in process and spend should be possible. BCI's senior management board followed the consultant's advice and hired Pierre Jardin, who had managed the supply function at one of BCI's competitors, to establish a central procurement organization. Pierre had personally started on the IT spend in Europe, while building up a group of supply professionals at head office. In the first two years, Pierre had succeeded in page 434 saving about $1 billion on Europe's IT spend with suppliers, and he then hired Mare Biron to take over IT acquisition. Having spent three years in IT supply worldwide, Marc had learned how each of the international business units operated. He was also well aware that business unit managers prized their local independence and were wary of head office involvement in their units. Nevertheless, Marc was successful in negotiating IT supply contracts that provided an additional S1 billion in annual savings. THE NEW BCI PRESIDENT Two years ago, a new president took over at BCI. With a strong marketing background, the new president insisted on worldwide brand recognition for BCI, with all business units displaying the corporate logo in all of their communications, promotion, and advertising. In addition, a major increase in marketing spend was initiated to grow the brand. For the first two years, there was no supply involvement in any country on the media spend as local and regional marketing managers had free reign on how to spend their budgets. MARC BIRON'S ASSIGNMENT Pierre Jardin had made reasonable progress in improving BCI's spend with suppliers for certain categories. In addition to the IT spend on hardware, software, and IT services, he had made progress in increasing supply involvement in corporate travel, fumiture, and paper purchases. In each category, resistance from local managers with strong preference for local and, in many cases, multiple suppliers had been strong. Aware that marketing's spend was large, although Pierre did not know the exact amount, he decided that this category might represent an opportunity for the supply function. Not only might BCI achieve considerable savings, but here was a category spend where, even in those business units that had a local supply manager, there had been no supply involvement at all historically. Therefore, working with and through local supply managers was not even an option. Although Pierre was reluctant to pull Mare Biron out of his IT assignment, he felt that Mare had the international experience, skills, and personality to tackle marketing's spend as a category. He, therefore, called Mare into his office and explained why he wanted Marc to drop his IT work and take on the marketing spend challenge. He gave Mare two months to come up with a plan. THE MARKETING SPEND Marc Biron had no marketing spend experience. He agreed with Pierre that this category was one of BCI's largest spends and if IT experience was any indicator, potentially an area of major savings opportunities. He knew that this was a major test for him and that success in this task would impact favorably on his future career. On the other hand, finding a successful way of gaining meaningful involvement for supply in this category would be difficult. He wondered how he should use the next two months that Pierre had granted him to come up with a plan and what that plan would be w 433/558