Christian Salvesen is a major distribution and food processing business. They provide logistical and supply chain support to retailers and a variety of industrial sectors. They operate a network of over 140 distribution and food processing centers throughout the United Kingdom, Benelux, France, Germany and Spain. Many of these locations are independent profit centres, and even where they are not they are allowed to operate with large degrees of autonomy. In addition a significant number of sites are dedicated to specific client contracts and have open book arrangements of varying degrees of transparency.
No professional purchasing department existed anywhere within Salvesen. The Fleet Operations team exercised some level of control and focus on the larger homogeneous expenditures but the vast majority of business spend was committed by autonomous depot based staff. None of these people had experience or training in more powerful purchasing techniques and few long term category management plans were in place.
ADR was commissioned to design and implement a transformation programme within Salvesen in the UK. The aim was to embed a consistent and more rigorous approach to purchasing of all goods and services, whilst retaining local ownership and, where appropriate, authority to manage key expenditures. The programme was expected to deliver multi million pound annualised cost savings across all categories of expenditure.
• The initial phase of the assignment consisted 3 interlocking strands :
• Hands on category support by ADR for a small number of quick win categories – designed to quickly deliver circa £750k of savings
• An interim structure based upon geographic “clusters” formed to create more effective leverage of categories currently managed independently using a largely local or regional supply base. ADR led and managed these clusters.
• Strands ii) and iii) also provided the platform to ensure best practice tools and techniques in Cost analysis and Supplier Management were embedded.
• The longer term plan involved the creation of a small central specialist procurement resource. Recruitment to this team via the development of carefully selected internal resource and external recruitment. Whilst the team was centrally located, they had very specific category and regional responsibilities. They also had to be able to provide varying styles of support to the organisation – Strategic Sourcing support (deal making); Process Owner support (frameworks and guidelines) and Consultancy Support (Category and Market specific intelligence).
• Finally the creation of a culture of measurement and high levels of performance expectation were fundamental to ensuring this programme was successful, as it was this that provided the mandate for change.
- Savings delivered in line with the original Opportunity Analysis.
- 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. Training of a critical mass of depot and head office personnel in the core thinking, practices and behaviours needed to achieve tactical control of the supply base.
Transport & Distribution
Transformation programme and sourcing support
Design and implement a transformation programme