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Drive down supplier-related risk and drive up the value derived from supplier relationships

Nationwide


Nationwide Building Society is a financial mutual institution based in the UK. It is currently the world’s largest building society and provides mortgage loans, savings and other personal banking services.

Like all financial institutions, Nationwide has faced significant challenges in recent years, as a result of the economic environment and changes in legislation. Nationwide Building Society’s goal was to achieve improved management oversight of its key third parties and to create a consistent approach to relationship management.

In early 2011, Nationwide’s group procurement function initiated a project to provide a consistent awareness, capability, ownership and accountability for all aspects of supplier management. The project was run with the collaboration of key business areas (business services, customer operations and information technology). The aims of this piece of work were to drive down supplier-related risk and drive up the value derived from supplier relationships. In addition, the project needed to establish process and practice that complied with the requirements of a highly regulated sector.

While pockets of good practice had been developed in the society, the approach was largely performance management based and did not fully exploit the opportunity to realise the full potential from across the supply base.

Given the society’s strong desire for continuous improvement and the imperative to drive benefits to its membership, it was decided that third party management would be given a high level of focus within group procurement as one of the key components of the ‘procure to pay’ strategy. The team started with a full review of the supply base, tiering the suppliers as strategic, preferred, approved or tactical. Based on the supplier tiering, a third party management framework was created and work commenced to create an approach to measure its effectiveness, calling on the resources and support of the internal key control functions such as IT, information security, finance, business continuity and customer experience to name but a few.
 

The use of effective technology for an improved third party management framework

Head of Group Procurement initiated a project to develop and implement an improved third party management framework (3PMF). State of Flux was initially engaged to review and advise on the framework, which coincided with the release of the State of Flux report entitled ‘The SRM Dividend’.

The Statess supplier management software was chosen as the tool to address many of the requirements of the 3PMF. In order to drive effective oversight and demonstrate compliance with FSA requirements, it was decided that the software should be implemented quickly and with a focus on governance and compliance. After initial meetings, Nationwide and State of Flux collaborated to implement the platform in just six weeks. A three month pilot with three strategic suppliers followed, involving the collection and uploading of key data, training and communications to the business.

The creation of the 3PMF and the implementation of the supplier management software enabled Nationwide to demonstrate to the FSA the priority they have given to supplier management.

The software is web-based, meaning it is accessible via the appropriate security protocols from anywhere with internet access. This allows any user of the platform to have an easy snapshot of a supplier relationship.
 

Nationwide’s supplier management platform has seen many benefits

A demonstration of the platform was given to the FSA along with the plans for the roll out. The FSA was completely satisfied that the introduction of the framework and platform were key enablers for Nationwide to increase the level of oversight and management of its key third party relationships.

The platform also provides a catalyst for Nationwide to start thinking about their third party relationships in more depth and has provided a means of communicating directly with key user groups.

Additionally, the platform has enabled Nationwide to have a central portal for third party management. This has allowed the building society to achieve a 'single version of the truth' with regard to controlling and maximising the value of third party management.
 

Nationwide look ahead to further improvement of third party relationships

Following on from the implementation and deployment of the supplier management software, the next steps for Nationwide and State of Flux involved rolling the platform out to a greater number of suppliers. The supplier on-boarding process is often a good starting point to develop supplier relationships due to the types of information that are required to populate the platform.

Suppliers are being prompted to start developing multi-year strategic relationship plans with Nationwide, developing risk and issue reporting, as well as behaving collaboratively with regard to sharing innovations amongst other activities. It is this strategic collaboration that ensures the success of Nationwide’s goal to improve the management and development of third party supplier relationships.

"The Statess supplier management software has given us the visibility of our supplier base that we required. After a quick implementation and pilot phase, we now have a tool that can give us a high-level or high-detail view of our third party relationships." Head of Procurement


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