Purchasing Strategy – Development and Implementation

The company was the UK arm of one of the worlds leading FMCG manufacturers and needed a fresh value-orientated approach to procurement.

Materials bought accounted for approximately 45% of sales cost using products made in nearly 30 factories across the UK. It was important to increase the focus of the inbound supply chain to meeting customer services targets.

The assignment incorporated reviewing all practices and procedures from design, planning and control, stock management, capacity planning, and purchasing. Supplier appraisal techniques and KPI’s were introduced. It was important to reduce the non-added value activity in the business and it was expected to change the way in which suppliers were managed.

What did we do for the company

In the UK this has meant changing the culture of the business so that it now works in harness with its suppliers – reduced in number by over 85% - rather than having the adversarial relationships of old. During this time, this changed the focus within Purchasing from being a transactional activity to one seeking value

Over 300 staff were trained in supplier development and appraisal. Over 1000 visits made to supplying manufacturing units to evaluate and where needed to improve their operations.

Development of e-Commerce techniques enabled the planning, forecasting and scheduling activities to be optimised for lean manufacturing.

Innovation events were also held with some 60 suppliers in partnership with the Marketing Department and the R&D centres to aid product innovation. Although organised in the UK some were attended by the European sister companies.

Outcomes

There has been a steadily improving performance against external and internal benchmarking exercises on prices paid. Internally the prices paid eventually matched those of the sister companies in Europe whose costs were traditionally lower.

The record on supply issues of waste, badly performing materials or faulty finished products has dramatically reduced

The company is now much better placed to address its brand innovation and renovation activities.

Competencies Demonstrated

• Business Process Re-engineering
• Change Management
• Lean Manufacturing
• Training
• E-Commerce
• Planning and Forecasting
• Innovation and product development