Medium sized Engineering Co
The Chief Executive of North East England-based engineering company with a turnover of £80 million, had identified that the company’s purchasing effort was no longer fully supporting the business. Two factors seemed to be driving this, one was the rapid expansion of the business , with average annual growth rates of 17%, and the second was growing complexity resulting from accelerating product innovation and increased divisionalisation of the business.
“The benefits that resulted from the programme are considerable, ranging from significant cost reduction on current products and services, an improved product development process with shorter lead-times and lower initial costs and, unusually, a significant new source of valuable market intelligence. Purchasing is now a key business strength of our fast moving business”.
Quote from the Chief Executive.
FTSE250 Company providing Retail & Business Services
The organisation had no central purchasing competence and yet over £250 million per year was spent, largely by budget holders, across 150 sites in the UK. The Board recognised that substantial opportunities for cost and value improvement were being missed.
Results:
- Significant savings (in excess of £5ook ) were achieved in less than seven months.
- The whole organisation developed an understanding of the benefits that expert procurement capability could deliver, and an appetite for re-organising to create such a capability.
- The creation of a well-integrated purchasing team with the necessary knowledge and skills to ensure the improvements in purchasing were sustainable.
A medium sized design led manufacturer
A market leading, but relatively small, manufacturer of medical devices supplying products to global pharmaceutical companies was being put under intense price pressure from its major customers and needed purchasing to deliver substantial cost improvements to sustain historic levels of profitability.
Results:
- Delivery of the cost savings (£1.4 million) identified in the diagnostic review
- Effective segmentation of purchasing activity so that both administrative (transactional) and commercial (core) purchasing tasks were optimally delivered
- An organisation structure for purchasing that facilitated effective supplier management and a community of internal stakeholders that was engaged with, and supportive of, that team.
FTSE250 logistics operator
A UK based company that operated two distinct businesses – a distribution and logistics business and a food processing business. The distribution business operated a network of over 80 depots throughout the UK. Most depots were profit centres, and even those that were not were allowed to operate with considerable autonomy.
No professional purchasing department existed anywhere within the business. Fleet Operations exercised some level of control and focus on the larger expenditures but the vast majority of business spend was committed by autonomous depot based staff.
Results
- Multi million pound cost savings (in excess of £5 million) delivered in line with the original Opportunity Analysis.
- Savings were generated across a range of categorires including Diesel, Tyres, Spare Parts, Agency/Temp Labour, IT, Office Suppliesc and various facilities management expenditure.
- Creation of sustainable, high level procurement competence within the organisation (the central team).
- Recognition, internally and externally, of procurement competence as a bid winning/contract retention capability.
