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CLIENT CASE STUDY


Global food company: Sourcing & procurement optimization


Accenture helped an international food company define and implement a global sourcing and procurement strategy and operating model.

Overview

To maintain its competitive edge, a global food company set an ambitious target of reducing its raw materials and packaging procurement costs by $200 million. Accenture worked closely with the company’s leadership team not only to identify opportunities for savings, but also create a strategy for capturing those savings, including a new operating model for procurement. With new, standardized processes, eSourcing capabilities, and well defined roles for global, regional and local procurement teams, the company is on track to achieve cost savings of $200 million.

Opportunity
To maintain its competitive edge and boost its financial performance, the food company established an ambitious strategy to reduce its operating costs by $1 billion by the end of the 2014 fiscal year. One area that held particular cost-savings appeal was procurement, which had traditionally been highly fragmented and managed on a region-by-region basis.

The company engaged Accenture to help identify how it might save $200 million from its global sourcing and procurement operations. Accenture, with its wide functional and deep industry knowledge, was a logical choice. In addition to bringing deep business strategy and procurement experience, Accenture had previously worked with the company’s primary investors to drive significant procurement savings at other food and beverage businesses.

Solution

Accenture deployed a team of experts with deep skills in procurement strategy development and implementation, as well as procurement operations, to identify specific cost-savings opportunities that would create a competitive advantage for the global food company.

Working closely with the company’s professionals, Accenture conducted a 15-week assessment of procurement operations across all spending categories around the world—which revealed plenty of opportunity for cost savings. Accenture wove the potential of those savings into a procurement strategy that combined business, technology and functional expertise into an approach for long-term, sustainable value.

To capture these savings, Accenture helped the client define a new operating model that would support the new procurement strategy. This model leveraged standardized processes, centers of excellence in the United States and Europe and well-defined roles for global, regional and local procurement teams. In the next phase of work, Accenture helped implement the strategy by pursuing specific cost-savings activities.

RESULTS

With Accenture’s help, the company is well on its way to transforming its procurement operations and securing $200 million in savings. The new procurement strategy and operating model produced 2014 savings of $48.5 million and run-rate savings of $104.7 million. This translates to a 7.9 percent cost improvement.

Specific activities related to improving sourcing via RFP/Q and eAuction events produced $13.5 million in 2014 savings and run-rate savings of $32.2 million (or 6 percent). And Accenture’s onsite category support in metals, glass and media management produced $33 million in 2014 savings and run-rate savings of $72.5 million, or 9.2 percent.

The new procurement strategy and operating model are poised to continue delivering significant cost savings in the years ahead. Equally important, they are enabling the food company to focus more investments on initiatives that will drive growth and high performance.