Overview of Egmont

Egmont is one of Scandinavia’s leading media companies, publishing products in over 30 countries.  Established by Egmont Harald Petersen in 1878, Egmont has developed into a €1.4bn turnover business with €94m EBT and 6,400 employees.  Egmont is a commercial foundation that donates a portion of its profits to help improve the lives of vulner¬able children and young people.  Egmont has traditionally been run on a more de-centralised model and has four key business divisions:  Publishing (established from the recently merged Magazines & Kids Media divisions), Books, Film and Television; the majority of revenue and costs are in the Scandinavian countries Denmark, Norway and Sweden.  These four divisions and three countries represented the scope of the project. Egmont is facing tough challenges in its traditional media products where the industry is facing an inexorable drive towards digitalisation.  This creates a strategic and an operational challenge which will increase pressure on the supply chain. 

Brief & Methodology

The brief was to produce a clear vision on how an evolving Procurement function can leverage Egmont’s collective strengths to create significant Cost Base Reduction (CBR) by making a step-change in the performance, systems, processes and structure of Procurement across the Group. Procure4, working closely with Egmont, has approached the project by making a ‘Hard’ assessment of the spend, structure, process and systems, combined with a ‘Soft’ assessment of resource capability, stakeholder appetite and willingness to change. 

The process has been managed using a straightforward Strategic Analysis process as follows:

Spend Data

Procure4 has captured 1m lines of data representing annual spend with all suppliers to Egmont group companies in Denmark, Sweden and Norway.  The Procure4 Team has cleansed and categorised the data according to a ‘Category Tree’ developed with Egmont.  The categorisations have subsequently been validated by the Divisional CFO’s.  The output is a ‘Spend Cube’ that enables us to view the spend by common categories across the Group.

Stakeholder Interviews

The Project Team had stakeholder interviews with divisional CFO’s, senior functional stakeholders and the Egmont Procurement Team in order to build its view of the As-Is.  The Project Team undertook more than 70 individual interviews, captured and distributed minutes, and collated the information to provide us with a broad understanding of Egmont’s business, current approach to managing key spend areas, and general opinions about the direction of procurement.

The Output

As-Is Situation Analysis

Our approach to understanding the As-Is Situation has been to consider:

  •      What Egmont buys: Understanding spend by category
  •      Where Egmont buys: Understanding suppliers by category
  •      Who buys at Egmont: Understanding who in Egmont defines specifications, who carries out the procurement activity and who manages the transactions
  •      How Egmont buys: the process, systems and reporting that Egmont uses for procurement

To-Be Modelling

The Project Team developed the To-Be Model in a workshop setting with key stakeholders in Finance and other functions.  We considered and identified the:

  •      Strategic importance of categories and therefore their prioritisation for CBR delivery
  •      Stage of each category’s ‘Procurement evolution’ and impact of this on sourcing approach
  •      Procurement leadership based on concentration of spend at divisional level
  •      ROI assessment and prioritisation of infrastructure change

Recommended To-Be Model 

The Project Team has created an engaging Vision and Strategic Plan for Procurement at Egmont that targets €15M of CBR from 2014 to 2016, whilst respecting the diverse needs of the Divisions:

  • CBR Plan: Two waves of activity have been drawn up with headline Approach Strategies for Wave 1, with a base target of €6m CBR. The plans for unlocking benefits have been developed by the Project Team based on the supplier spend data analysis, interviews with stakeholders, an assessment of the current maturity of the procurement approach and the potential CBR opportunity. Furthermore the main part of the approach strategies have been developed either by using benchmark pricing or Procure4’s extensive category knowledge. 
  • Infrastructure Change:  Wave 1 and 2 categories have been selected as those requiring minimal investment in process, systems or structure to facilitate delivery.  However, Procure4 has proposed additional rigour to be applied to the wider systems, processes and disciplines in transaction, procurement and performance management to be rolled out as Approach Strategies are delivered.
  • Structure: There was universal consensus around the need for a matrix structure to deliver the programme, led by central procurement whilst ensuring that divisional needs are absolutely respected and incorporated into the development and delivery of the Approach Strategies.  Equally the scale of the activity necessitates the use of additional, mid-term procurement and project management capacity and systems, with a proposal that this is provided by the third party procurement team, Procure4.
  • Governance & Risk Mitigation: Change in any diverse, de-centralised organisation requires strong Board Leadership and robust project governance.  As such this has been recommended in this report.  Equally Procure4 brings experience of managing ‘The Inevitable Challenges’ of this type of project and have identified some simple areas of focus to mitigate such risks.

Key Facts

€15,000,000 Targeted CBR Over 2 Years
30+ Number of Countries Client Publishes Products in
70 Number of Stakeholder Interviews

Testimonial from Egmont

I would like to thank Procure4 for a great cooperation on the project the past months. It has been a very interesting and educational experience for our business and I have enjoyed getting to know you and working with you. I look forward to working with you again during 2014.

Marie-Louise Christiansen, Head of Procurement & Process, Egmont

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