Design2Cost

Vodafone Procurement Company

 

Vodafone has long been an exemplar in procurement, but in 2017 the telecommunications company embarked on another transformative journey, shifting focus from price negotiation to embedding cost and value creation into the DNA of the business. It launched Design2Cost, with the aim of delivering at least €300 million in impact in five years and an aspiration to deliver €1bn. The team performs detailed “teardowns” – physical disassembly of a product or logical disassembly of a service to determine the cost of each constituent element at the most granular level possible. A webcast explaining the concept is available to all 90,000 Vodafone employees globally and gamified learning rewards staff best able to grasp the principles. Vodafone reported €125 million of savings from D2C in its first year. Provisional numbers for 2018-19 are for a further €278 million, against a target of €60 million and €180 million respectively. D2C methodology has now been applied to 24% of its global spend, with a plan to reach 41% in the next 12 months. The function was awarded Vodafone’s annual Finance Award for 2018. It can now add a CIPS award.

Judges’ comments: "While “design to cost” is not a new concept, Vodafone’s approach has accelerated it to a new level. I like the engagement approach and also the innovation using machine learning to reduce component identification time. “Design to cost” reinvented and put back to life in a very effective way."

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