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Construction Procurement

NEEDS-BASED RESULTS

 

Construction Procurement

SITUATION

Construction company had a declining rate of winning tenders due to its uncompetitive position and high cost structure.

DRIVER GOAL

  • Deliver annual savings of R98 million through reductions in procurement cost and TCO.
  • Design and implement a center-led, world class Procurement organization and a technology solution.

RESULT

  • Identified cost reductions totaling more than R113 million annualized savings.
  • Designed and implemented a center-led procurement model and organization.
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Case Study

Implement a Center-Led, World Class Procurement Organization

Issue

As part of a comprehensive transformation program to improve corporate profitability, a major South African-based construction company set its sights on designing and building a center-led procurement organization, technology and data, processes and performance management. The company faced very challenging market conditions with a declining rate of winning tenders due to its uncompetitive position and high cost structure, which required management to drastically reduce costs. The company’s operating divisions functioned as independent business silos with much misalignment of objectives across the divisions and with the parent company. Furthermore, the existing Procurement organization required major up-skilling to become world class.

Highland Approach

A detailed analysis identified the immediate changes that were needed in organizational structure, processes, technology and data, and performance management. The team focused on prioritizing and capturing immediate and short-term sourcing and total cost of ownership improvements to achieve savings. Longer-term focus was placed on prioritizing the top spend commodities while the organization structure and Procurement technology design efforts were underway.

Actions Taken

The Highland Group partnered with the client to implement a Strategic Sourcing Methodology focused around commodity management. Reaching the goals required re-definition of skills and a new organization structure, processes and systems to manage the ongoing implementation and sustain the savings.

Identified savings of

R163m

With all your hard work and effort to date, you gave me an opportunity to build on the foundation you put in place.

Jaques Hugo

Chief Procurement Officer

Related Information

subject matter-based

Presenting Analyst

John is a Senior Executive and Presenting Analyst at The Highland Group with more than 30 years of leadership experience in management consulting. He has led hundreds of global consulting engagements that delivered an array of operational improvement solutions with total client benefits exceeding $1 billion dollars.

Head of Organizational Development

Don is an internationally recognized organizational change and development expert with 33 years of global experience in partnering with results-oriented clients to achieve sustainable behavioral change and targeted bottom-line results in productivity, quality and profitability. He is recognized for fostering high levels of enterprise-wide sustainable performance improvement ownership. Don’s key strengths include his ability to engage stakeholders at all levels, create collaborative environments and work within the culture to achieve leadership, management and employee breakthrough results.