07 June 2007 | Paul Snell
Transport giant First Group has made procurement a central part of its business, thanks to a new "customer-focused" strategy.
This includes recruiting buyers from outside traditional purchasing backgrounds to improve internal and supplier relationships.
Eddie Kerr, group purchasing director, told SM changes to the purchasing process had also meant altering the way it deals with people. He said bringing in staff from non-buying roles had been important: "We are very open about pooling and sharing experience. In return for what they bring, we coach and develop them and they commit to formal study. It gives us credibility with customers who already thought highly of them."
All sourcing at the group now has a cross-functional approach and this has led to more support for procurement within the company. "People now come to us with issues that frankly would previously have bypassed procurement," he said.
The decision to make meeting customer needs the firm's priority has had other advantages for improving the way purchasing works.
"Purchasing is now dedicated toward supporting our internal customers, which was not always the case before," said Kerr. "We have spent a lot of time on prioritising customer feedback. Whatever we do from a group position must be for the benefit of the customer."
He added the new model had improved the quality of the firm's tenders, because the group was now procuring items that customers believed were important. "It is a valuable test to ensure we do not assume anything on behalf of our customers. It gives us very solid specifications to procure from suppliers and consequently we have much more meaningful discussions with them."
One example is the firm's focus on ethical and environmental issues, driven by increasing customer interest in its environmental impact.
By working with the group's fuel supplier, half of the firm's bus fleet now runs on bio diesel or ultra-low sulphur diesel - all for the same costs as the regular fuel.
It also ensured the uniforms for its 70,000 staff were sustainably and ethically sourced.
"The combination of a clear customer need and a strong supply base can make huge changes happen, which makes customers feel good about the purchasing process," he said.