Bovis ditches local suppliers for cheaper global contracts

31 January 2002
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31 January 2002 | David Arminas

Construction and project management company Bovis Lend Lease has reduced its local supply base in favour of a more global supply chain.

Graham Jelly, recently appointed as the company's first global procurement director, said the goal was to save £1 million this year as part of a supply chain cost-reduction plan.

"We haven't centralised procurement, but are converting some regional contracts into more global deals," he said. "We've reduced our supply chain in Europe to 57 preferred contractors, where before we had more than 250."

The focus will be on establishing alliances with suppliers for several products. Bovis will be talking with makers of lifts, carpets, raised flooring, white goods and air-conditioning units.

The relationship with lift maker Otis is an example of where Bovis is moving closer to a smaller number of main suppliers, added Jelly.

Bovis works closely with Otis in Europe under a regional arrangement, and the companies are in talks about extending the deal to the rest of the world.

Jelly said: "It's not just about bringing unit price down, but working with them to reduce process costs by around 15 per cent. Installation time has been cut by 50 per cent."

However, the construction company still intends to use non-preferred suppliers. Some items, such as plasterboard, are suitable for reverse auctions, said Jelly.

Reverse auctions have been successful with several clients in the past year. Savings have been around 15 per cent, but in one case Bovis saved 54 per cent on petrol station signs in the US.

Jelly emphasised that, despite his new role, the company was not imposing a single procurement system and buyers could still use local suppliers.

The issue for Bovis is to make its supply chain more visible to its clients and to share savings from the new global alliance with them.

Jelly added that one of the hardest tasks will be to ensure Bovis's divisions understand the new supplier relationships.

SMjan2002

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