Use of Supplier Days to optimise conditions

Increasing efficiency in procurement

As part of the sale of the construction chemicals division to a private equity investor, the Group initiated a project that was also continued under the umbrella of the company in the following years.

Within the framework of a comprehensive transformation, processes in various company divisions were to be optimised and costs saved in the process. One important area was the professionalisation of procurement, for which the project managers defined ambitious savings targets. These were to be achieved through a mix of spend and demand management.

Methods in procurement

In preparation for the carve-out, we redesigned and rebuilt the procurement organisation. In addition to defining the operating model and the procurement processes, this included, above all, introducing new methods and procurement levers in order to create the most efficient procurement possible and to exploit the potential.

Among other things, we conducted Should Costing analyses and revolutionised the way negotiations are conducted through e-auctions and Supplier Days.

Supplier Days

Supplier Days are particularly suitable for achieving quick savings, as they can create maximum competition. As part of the project, we held a total of eight Supplier Days in three regions to optimise conditions in the areas of raw materials, packaging and services. We invited selected suppliers to the negotiation days, with whom the previously defined negotiation teams spoke in parallel. In addition to price, we also discussed innovations and opportunities for cooperation on these days in order to not only achieve short-term results, but to find the best partners in the long term.

The following three success factors were decisive for the successful course :

• Clear objectives and detailed preparation: Thorough planning of each meeting and testing of negotiation strategies in “dry runs”.
• Support of top management: personal greeting of suppliers at the Supplier Days
• “Open cards” towards the suppliers: partnership-based exchange in the preparation, during the Supplier Days and in the subsequent communication

Demand Management & Should Costing

Especially in strong seller’s markets and in order to be able to react quickly to unforeseeable events, it is important to get an overview of which items are essential and where short-term adjustments are possible. In cross-functional cooperation with the departments concerned, we have therefore carried out extensive demand management analyses and used them to tap further potential. For example, cleaning services were standardised across all locations through a survey of demand and comparison with benchmarks, and the frequency was adjusted accordingly.

Results

• Transformation of the procurement organisation
• Strengthening the importance of procurement in the company
• Establishment of professional procurement methods
• Significant savings in both direct and indirect requirements
• Strengthening of supplier management through open communication