Construction Procurement

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.