Case
Study
Efficient, Effective and Compliant Intelligent Spend Management
- Client: Metro Trains Melbourne
- Industry: Transport
- Category: Spend Management
- Partner: SAP
The Challenge
Metro Trains Melbourne (MTM) is responsible for managing significant procurement activity, with over $1.2 billion in annual spend and more than 1,000 suppliers supporting the operation and maintenance of Melbourne’s rail network. Procurement plays a critical role in delivering sustainable and responsible supplier solutions while ensuring value for money.
Prior to 2016, MTM’s procurement function faced several challenges:
- Procurement policies, processes, and systems were predominantly manual.
- Low levels of control, high operational risk, and limited agility.
- Performance below industry benchmarks for key procurement metrics.
- Poor adoption of procurement best practices, resulting in process and compliance challenges.
- Stakeholder frustration due to delays and inefficiencies.
- The need to simplify sourcing and contract management processes.
- The need to make compliance easier and improve the purchasing experience through catalogues, approvals, and streamlined buying processes
The Solution
Beginning in 2019, MTM embarked on a procurement transformation program focused on strengthening policy and controls, leveraging SAP Ariba technology, and improving Purchase-to-Pay performance.
FourPL was engaged to:
- Assess MTM’s existing SAP Ariba deployment.
- Advise on procurement process improvements.
- Develop a prioritised roadmap of improvement initiatives.
- Define and deliver a costed program of work.
- Support the practical implementation of enhancements in phases.
- Leverage spend management expertise to improve the effectiveness of purchasing and payment processes.
- Utilise Ariba’s reporting capabilities to improve performance monitoring and governance.
The transformation focused on:
- Strengthening procurement governance and controls.
- Enabling business transformation through SAP Ariba.
- Monitoring and measuring Purchase-to-Pay performance.
- Upskilling internal resources.
- Recruiting subject matter experts.
- Implementing governance and performance benchmarking practices.
- Driving business enablement through best-in-class technology.
The Results
The transformation delivered significant improvements in capability, agility, governance, compliance, operational excellence, and procurement performance.
Operational Excellence
- Touchless invoicing increased from 36% to 65%.
- Invoice approval cycle time reduced from 26 days to 2.1 days (92% improvement).
- Embedded operational excellence across procurement systems and processes.
- Reduced administration and rework through self-service capabilities and process simplification.
Greater Visibility
- Spend associated with contracts and catalogues increased from 15% to 60%.
- Greater visibility into organisational spend patterns, behaviours, supplier performance, and market trends.
- Improved ability to focus on high-value spend and strengthen category management capabilities.
- Avoided approximately $5 million in cost increases.
Compliance & Governance
- Spend under contract increased from 29% to 79%.
- Improved policy compliance and procurement controls.
- Closed more than 16 supplier financial risk audit actions.
- Enhanced supplier risk visibility and management.
Adoption & Business Value
- 97 sourcing events completed.
- 300+ contracts managed covering $890 million in spend.
- 41,000+ purchase orders processed through Ariba representing over $1.2 billion in spend.
- Achieved 107.3% of target performance in FY22.
- Improved profitability, supplier performance, user experience, and procurement maturity.
Overall, the project helped reduce operating costs, improve profit margins, increase procurement adoption, strengthen governance and compliance, and create greater organisational visibility and control over spend management.
The Conclusion
“MTM’s procurement and supply chain management bears no resemblance to what MTM inherited in 2009 when there were very few contracts, no purchasing system and frequent supply chain problems. It has taken two evolutions to get where we are today, within these last three years taking MTM to a level of which we can be proud and is consistent with MTR’s high quality brand.”
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