Global contract caterer achieves significant savings through targeted cost reduction
Delivering savings across ‘less targeted’ spend areas while creating more time for strategic, value-add activity
A leading global contract caterer, serving customers in the public and private sectors - both on and off-shore - has achieved significant financial savings by implementing a targeted programme of procurement cost reduction.
With a procurement function historically focused on everyday ingredients, the business wanted to drive additional savings across its indirect and facilities management categories. Utilising the services, expertise and supply market knowledge of Procura the project had 2 primary objectives:
- to identify and deliver additional procurement cost savings in areas which had not been explored for some time due to resource challenges
- to free up time across the internal team to focus on strategic, value add procurement activity in the key ‘direct spend’ categories.
Identifying a seven-figure saving opportunity
An initial Spend Analysis and Opportunity Assessment identified a significant seven figure saving would be possible by delivering a series of cost reduction initiatives over a 7 month programme of delivery.
The programme of work would cover more than 41 individual sourcing projects across 16 categories, focusing on Contract Catering and FM industry specific spend areas together with general indirect categories
Sourcing strategies would include re-negotiations with suppliers, full tender processes and service delivery changes.
Rapid results and EBITDA impact
The project delivered rapid savings within a short space of time, creating a significant positive impact on EBITDA performance for the current financial year. In addition, seven figure recurring savings over the following 2 years would add additional impact to bottom line performance, helping to achieve a substantial return on investment.
The table below illustrates some of the savings achieved, which in certain categories were as high as 60%.
|Cooking Oil Collection||60%|
|Offshore Waste Compactors||5%|
Vice President Northern European Procurement
In a nutshell, Procura delivered; they did what they said they would and we are seeing the impact on our bottom line already. That impact, taken over a 3 year period, will be substantial. During the project, we also created more of another precious commodity – time - freeing our internal teams to focus on strategically crucial areas which had simply not been viable previously
Points to consider
- With the demands on internal procurement teams growing, freeing up time by working with an external partner in ‘less targeted’ spend areas can prove highly effective
- By focusing on initiatives that deliver recurring savings over several years, the bottom line impact can be substantial
- Creating an Indirect Spend Managed Service is increasingly being used as an effective way of maximising savings from indirect spend on an ongoing basis