A global industrial components manufacturer had experienced a long period of successful growth, both organically and via acquisitions.
Purchasing Activities
However, purchasing activities were scattered both geographically and in terms of focus and responsibilities; almost 2/3 of all purchasing personnel were distributed to some 150 locations worldwide. Further, there was no clear distinction between strategic, tactical and operational responsibilities; most purchasing personnel were generalists with limited specialised knowledge and experience. Consequently, when the company compared itself to best practice studies, their overall capability was regarded as below average.
Opportunity to Transform
Hence, management saw an opportunity to transform purchasing into a more strategic function that could better leverage the company’s full purchasing into a more strategic function that could better leverage the company’s full purchasing scale – into further cost reductions as well as contributions to innovation.
A global leader in its market, but with a fragmented purchasing organisation unable to take a strategic role to support further profitable growth ambitions.
A revised and thoroughly anchored strategy for purchasing, combined with organisational redesign and ambitious training curricula – transformed purchasing into a strategic contributor.
Top management initiated and sponsored a transformation program headed by a strong program management office (PMO), with active involvement of central and local purchasing, business stakeholders and HR.
Understanding the Starting Point
As a part of the change management ambition, significant emphasis was placed on thoroughly understanding the starting point in detail, including current activities, individual and collective capabilities, as well as spend analytics and comparisons to internal and external best practices.
Overall Strategy
A new overall strategy and role for purchasing was defined, fully in line with overall strategy and thoroughly anchored with purchasing and business stakeholders. This created a clear view of what value and impact purchasing was expected to deliver to the organisation.
Organisational Structure
A new operating model and (more centralised) organisational structure provided clarity as to how purchasing was to collaborate with stakeholders, as well as a clear separation between strategic vs. operational activities. Dedicated centers of excellence capabilities in strategic locations.
New Approach
To enable the transition to the new structure, a new approach to professional development was defined, including revised job descriptions, career paths and competence frameworks. A concept of individual competency assessments and development/training plans was rolled out globally to support the transition into new roles and jobs.
A much stronger strategic sourcing approach delivering significant savings.
