Issue 6, January 2012

Agents of Change

“Procurement people are change agents,” according to Antoinette Brandi, Manager Procurement and Logistics, Industrial Energy Division at Leighton Contractors and former regional Chief Procurement Officer at Suzlon, a leading wind power company. Speaking at a recent MRO Category Council meeting, Antoinette shared her approach and experiences with a recent cost management drive exercise at Suzlon where the aim for her group was to save over $18 million. 

Faced with this massive savings target and tough general economic conditions, Antoinette’s team devised a strategy to find savings that could lower costs in an environment where the ‘low-hanging-fruit’ had already been addressed. The five areas to be addressed by the savings strategy were:

  • Focus on value engineering – determine whether products can be re-engineered to lower costs or increase efficiencies;
  • Collaboration between geographies – work with other regional groups;
  • Standardisation of processes and design – reduce complexity;
  • Identify common equipment for global negotiations;
  • Verification of data – ensure that data within the organisation’s own system matches that of the suppliers
Of particular interest to the MRO group was the value engineering component of the strategy – the area which delivered the greatest savings. This, noted Antoinette, was a way to “push supply beyond just purchasing” to deliver real and measurable savings to the organisation through efficiencies and improved designs, rather than reducing quality or requirements. 

Reductions in waste through improved processes, re-engineering to more efficiently use materials, new transportation systems resulting in lower handling costs and a revenue stream from recycling used parts were some of the changes driven by procurement. By driving a focus on value engineering, the business is able to see the value of procurement over and above a ‘traditional’ sourcing or contract management role. 

A word of advice from Antoinette however was that value engineering and re-design requires business engagement in the program to see change as part of the continuous improvement program, not just a quick grab for savings.