CASE NO. 85
Procurement initiative for a global corporation
INITIAL SITUATION
Innovative concepts were called for in the strategic procurement of a global machinery and plant engineering corporation. In the budgeting process the board of management expected high additional savings from a business unit with a multi-billion Euro purchasing volume.
CHALLENGE
Corporate procurement was organised in several pooling levels and had a global reach. Significant effects from the established procurement methods had already been included in the budget as projected savings. Prices planned for raw materials were not hedged, so that any unexpected rise had to be compensated in addition. The project started with little lead time at the beginning of the business year.
SOLUTION
The procurement initiative tackled the business units as well as the cross-divisional commodity groups. Within a common framework the established procurement methods achieved a greater effect in the regions, across divisions and covering more parts and commodities. Depending on the maturity of the commodity group management new methods were introduced. A task force of managers and consultants took responsibility for the saving targets and cooperated individually with business units, commodity and site managers. Monitoring progress with top management in weekly meetings was decisive for the project success.
RESULT
The task force achieved the expected additional savings in the running year, a high double-digit million figure. Within only three months all individual measures were defined and being tracked in the procurement controlling system.
