Optimizing training vendors at a global tobacco company

When this leading international tobacco firm became concerned about the lack of visibility of its external training spend across its regions and local countries, it commissioned Hemsley Fraser to undertake a vendor optimization project.

To gather and analyze the training data from over 100 operational sites and production facilities in 67 countries, Hemsley Fraser examined the codes that had been entered as training costs on the company’s finance system. A range of training areas were covered by this analysis, including leadership development, sales, commercial, functional, technical and language training, as well as speciality courses such as ‘tobacco embroidery’. 

The company had estimated that $40million had been spent on this training across its regions and local countries, with 1,800 suppliers. However, the Hemsley Fraser team found that other significant costs such as accommodation, travel expenses and materials had been incorrectly coded as ‘training’ on the finance system - and that many training courses had been wrongly assigned to other areas of the business such as operations and professional services.

The team created a ‘category hierarchy’ of identifiable topics - including sales training, coaching, negotiation training and presentation training - to ascertain exactly what training had been booked in each country. All non-training costs were stripped out and a spend of $18million with third party suppliers was identified. This breakdown of training was validated by the individual countries, who confirmed that it was a true reflection of their external spend.

The analysis revealed inconsistencies in the way that training had been sourced, booked, administered, evaluated and managed throughout the business. Importantly, it also highlighted that 16,500 days were being wasted by duplicating processes such as finding and onboarding training suppliers across 67 countries.

The team identified that efficiencies and savings of $1.5million could be made through vendor optimization. Recommendations were provided on how to cut the number of training suppliers by 84%; re-negotiate terms and discounts with the preferred providers; aggregate courses; substitute certain face-to-face courses with e-learning; evaluate training more effectively and utilize demand management.

The team created an ‘interactive dashboard’, giving an overview of the training spend in each country, that will provide the company with up-to-date management information on an on-going basis. Breakdowns of specific details can be viewed across any region, function, level or supplier. Insights and analytics are provided that will help to review activity and support informed decisions in the future.

Further recommendations were provided to underpin and support a more consistent, end-to-end training strategy. These covered aspects such as supplier relationship management, delegate administration, communication and the governance processes of how training is booked within the business.