Procurement Transformation – $4B Manufacturing Company

Company profile

A manufacturer of food service, retail, and industrial food products with operations across North America and Asia.

Business challenge

Transform a low-performing, disconnected, and tactically focused Procurement team into a high-performing team delivering significantly increased value, strategic leadership, and functional capability.

Approach

Conducted a comprehensive current-state assessment, developed a transformation plan prioritizing the most important and urgent needs and opportunities, aligned that transformation plan with C-suite executives and key leadership stakeholders, and implemented quarterly check and adjust progress reviews with C-suite executives. The transformation plan focused on developing and implementing:

• A strong/capable team of strategic leaders and change agents
• Strategies and plans aligned with the business
• Win-win internal, supplier, and external partnerships
• Best practice and lean processes
• Increased capabilities to leverage data, benchmarking, and analytics
• Performance management practices including KPIs, goals/targets, scorecards, and prioritized improvement initiatives.

Results and Impact

Financial Impact

• 7x increase in annual cost savings (direct and indirect)
• 15% increase in payment terms
• All cost savings reported were validated by Finance
• Implemented Procurement inflation and cost savings forecasting, enabling proactive business/financial planning

Operational Impact

• Supplier fill rate misses were reduced by 75%
• Minimal supply disruption during a period of significant COVID supply constraints

Organization Impact

• Category strategies were developed and aligned for all key categories
• Best practices were implemented (eg. should cost modeling, inflation mitigation tracking, supplier segmentation, supply agreement target T&Cs, etc.)
• Partnerships with 3^rd party category SMEs accelerated savings identification and implementation
• Implemented a Procurement scorecard highlighting performance to KPI targets and deliverable goals

Strategic benefits

• Strategic supplier relationships resulted in numerous examples of favorable treatment in cost, supply, innovation, etc.
• Procurement functional and category strategies were aligned with key business stakeholders
• Procurement transformation progress and impact began being discussed quarterly during Board of Directors meetings.