Background:
UK's largest manufacturer of supermarket own brand food products supplying ready meals, salads, desserts, pizzas and garlic breads. Every major retailer in the UK market is a customer and some manufacturing plants are dedicated to sole customers. Business subject to "squeezing" between suppliers higher price and customers lower costs demands.
The purchasing team comprised small central team and localised BU purchasing managers. Little coordination of spend or sharing of best practice, paid lip service to "Group" deals.
Budget forecast incoming costs would rise by £5m (1%), deemed as unacceptable. HoP challenged via a CEO sponsored "BIG H.A.G" to change culture and achieve price / cost down across the whole of business. Lack of investment in purchasing training or processes reflected in lack of tools and techniques used and the 'price drift' nature of suppliers pricing.
Aims:
ADR were selected through a competitive process and engaged to design and project manage a "breakthrough" change program across all categories comprising £350m of spend. The objective was to introduce category management or source planning supported by new tools and techniques that could be quickly and effectively deployed. Initial need to retain local ownership to get buy in whilst leading categories on behalf of the whole. Key deliverable: tackle a minimum of 25 categories and deliver >£6m of savings in less than 12 months.
Project:
The Key Deliverables of Project "Churchill" were :-
- Detailed "Opportunity Analysis" of Purchasing in both Central and BU locations involving detailed visits to each site and face-to-face interviews
- Training of all key Purchasing personnel in core tools and techniques needed to achieve Tactical Control of the supply base
- Project management of the overall savings effort to ensure overall performance and reporting met the required objectives
- Hands on category support or leadership by ADR for approximately 25% of the categories - enabled us to work at least once with each Cat Manager and embed the knowledge
- Guidance on extending the delivery through strategic sourcing and challenge of existing processes
Secondary goal to raise the competencies of the Purchasing community and identify a handful of Category Managers capable of leading future strategic organisational change
Results:
Savings delivery was in excess of the initial OA and the required target - approaching £10.5m was achieved in 12 months.
Successfully challenged "taboos" such as customer nominated sources and suppliers rebates to customers.
Introduced new suppliers and significant changes to supply allocation in order to gain and achieve tactical control of suppliers.
Clear evidence of behaviour change in Category Managers |
