Case study

Transforming the Procurement organization of a company with highly volatile & project dependent purchases

Our client, a large Belgian company in the construction sector, was having difficulties coping with post-COVID raw material price hikes and availability. 

Their raw material requirements vary greatly due to their project business, and few structures were in place to manage procurement cross-company.

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Strategic COntext

Low-margin, high-risk business with fierce competition 

Sudden (post-COVID) steep raw material price increases and shortages led to delays and further margin decreases

Challenges
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Challenges
  • Culture of multiple, specialized subsidiaries with high levels of autonomy and limited intra-company cooperation. 
  • Ineffective procurement operating model, incl. unclear allocation of responsibilities and limited coordination amongst site buyers & the central procurement department. 
  • Lack of cross-project spend visibility and transparency of financial flows​. 
Objectives
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Objectives

Our objective was to transform the procurement organization and enable leveraging cross-company volumes in supplier negotiations. Thus, increasing the value created by the procurement organization and upping cost & supply stability over longer periods. 

  

  • Scale-up of procurement efficiency, capabilities & way of working within existing company DNA. 
  • Identification of key price improvement categories & renegotiate agreements to relieve cost pressure and improve security of supply. 
Our approach
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Our approach

Diagnostic phase

  • Analysis of procurement contracts, prices and organization, incl. benchmarking against company peers & market trends. 
  • Defining a procurement roadmap, prioritising high-value categories and identifying potential cost, organization & capability improvements. 
  • Design of a new, hybrid procurement organization to leverage cross-company category expertise & volumes. 

Roll-out

  • Launch of pilot, high-value categories to:
    • Find and realize initial savings in line with the roadmap to build trust throughout the larger organization. 
    • Draft role descriptions & required capabilities for new roles in the procurement model, as well as assist in bringing on the right people.
Results
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Results
  • Delivered a phased plan for procurement organizational changes, capability developments and category wave plan, incl. timelines, value to be realized and to-be ways of working within procurement.
  • Decentralized DNA of the company remained intact, with buy-in from leadership on defined roles & responsibilities and boundaries of functions.
  • Established pilot categories towards 10% savings realization and assisted in hiring leadership to manage the transformation.