Delivering greater procurement efficiencies for a construction company

The issue

  • £1billion division split into 6 semi-autonomous business units, spending £450m per annum on materials and sub-contracted services
  • Each business unit under revenue and margin pressure especially those dependant on public sector work
  • By re-establishing good procurement practices  a modest 3% savings target was agreed upon, the stretch being that the full cash saving had to be delivered in-year
  • No single picture of procurement spend or performance compared to the external market
  • Procurement & supply chain savings were already baked into business unit budgets and there was pressure from plc to deliver over and above this

Solution

  • Created a definitive ‘spend cube’ and with it a single set of numbers
  • Completed a top-down and bottom-up analysis of spend at the detailed category/supplier level and agreed impactable spend
  • Created and executed a prioritised implementation plan closely monitoring and recording the benefits as they are realised
  • Redesigned the P&SC organisation bringing in the necessary skills and expertise as required

The results

  • In-year cash savings of £8million with an exit run rate of £10million per annum
  • New operating model fully installed and driving benefits (sustainability)
  • Benefits fully traceable within business unit P&L

An award-winning team

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