Reimagining global procurement

The challenge

After a series of acquisitions, the client had reached new, global scale. However, our client was lagging behind the competition in terms of purchasing capability and recognised the benefits of evolving its existing Group Purchasing function into a global Procurement Company model. In so doing, our client was looking to leverage its increased global scale to realise significant potential savings in both Direct and Indirect spend.

Our solution and objectives

We proposed a future operating model with direct and indirect categories of spend evolving to either centre-led or buy-sell depending on the complexity of the spend and the scale of opportunity available. In parallel, the total expenditure of over €8billion spend was analysed to ensure the optimal design of the new operating model on a category by category basis. Commodity risk exposure was also analysed and new hedging strategies, processes and governance structures designed and implemented. Once piloted in two initial markets, we have helped industrialise the implementation based on category, technology and geography.

In addition to procurement operating model design, we also implemented an enhanced opportunity assessment process, using a range of sourcing levers. The opportunity assessment was conducted across five categories of direct and indirect spend.

Measurable results

Creation of new Global Procurement Company driving significant annualised savings across global spend categories and exceeding initial business case by over 200%.

Qualitative results

  • Setup of new operational system to support introduction of new procurement models
  • Global spend analysis with consistent, cleansed vendor and material master data providing true spend visibility and comprehensive, real time reporting
  • Improved compliance to preferred suppliers, payment terms and contract prices through better data management
  • Newly created internal risk management team delivering working capital benefits
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