2023 GLOBAL SRM RESEARCH REPORT
CASE STUDY: DISCOVER FINANCIAL SERVICES
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Foundations to supplier management carefully laid over the past three years will generate valuable returns for Discover Championing change
This year, Discover’s Online Savings Account ranked #1 in customer satisfaction in the J.D. Power 2023 US Direct Banking Satisfaction Study, and it has clinched various customer satisfaction titles over the past few years. The business was already set on the right trajectory to achieve its strategic aim when four years ago, its leadership team realised they could go further, faster. The bank’s executives, led by a sponsor at the top table, recognised that the procurement and sourcing function was “a strategic lever that it had not yet pulled”. “As companies grow, their supplier networks increase and become more complicated, so our leaders decided to build-out the function in a more robust manner,” says Thomas. As a financial services company, third-party risk management processes were already strong, what it hoped to do was put a bigger focus on spend and relationship management. The target is to enhance how it works with its 2,000 or so suppliers, especially its highest risk and highest spend partners. Procurement at Discover is now deep into a transformation designed to optimise its interactions with third-parties - to take them from transactional relationships to strategic partnerships. Procurement advancements
The function is now near quadruple its original size, comprising sourcing, contracting, onboarding, technology, analytics, and relationship-management professionals who add strength and depth to the team. The department has since developed its processes and structures, including the full source-to-pay process, examined onboarding, invoicing, contracting, how to manage supplier relationships, as well as how to go about terminating supplier arrangements, if needed. Stakeholder training and tools Discover runs a decentralised supplier management model, with key stakeholders overseeing many significant supplier relationships. As such, procurement wanted to further support internal colleagues to perform that part of their role. “My team did State of Flux training in 2020 - following that we realised we had the opportunity to bring the entire enterprise on this journey with us - everyone who is managing relationships. We built out a Centre of Excellence function and rolled out ‘ The basics of supplier management’, a six-part training series with the goal of strengthening supplier performance and relationships management acumen for our stakeholders in the business who had responsibility for managing the relationships.”
Discover Financial Services has a clear goal: It wants to be the leading consumer digital bank and payment services company. A relatively young and new player in the market, it launched its first product nationally across North America in 1986 with a TV commercial that ran during Super Bowl XX. Since then, Discover has grown into a $25 billion-plus business with two main arms: a payment network; and a bank that offers loans, credit cards, and savings and deposit accounts.
It does all this without any real physical footprint, prides itself on its 100% US-based customer service, and is consistently rated at or among the top for customer service among banks and credit card companies. “Customer service is our bread and butter and our crown jewel,” says Michael Thomas, Head of Supplier Management and Business Diversity. Operating globally but with its largest footprint in North America, the brand is an industry leader at customer satisfaction.
“Our suppliers are part of our extended enterprise and play a huge role in our ability to deliver the products and services that our customers want in a compliant manner - and that makes it so important to place the right level of attention on how they are managed.”
Shortly after the decision to effect change, new Chief Procurement and Corporate Services Officer Todd Podell joined Discover and began driving momentum for the improvements. Steps began with training for the procurement and sourcing department, which translated into myriad changes for them and their stakeholders around resourcing, tools and systems. “People, processes and technology have been completely overhauled over the past few years to make things easier for our internal business partners,” says Thomas. “We want to enable them and their functions to better serve our customers and make it simpler for third parties to work with us too. We want to be a customer of choice for our third-party partners, so we knew we needed to set clear expectations and establish easier processes.”
Michael Thomas , Head of Supplier Management and Business Diversity, Discover Financial Services.
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