13 March 2008
The Carphone Warehouse is ready for the next stage of its purchasing 'journey', Paul Snell finds out what this involves and what progress has been made so far
The car phone itself may have been eclipsed by improvements in technology, but retailer Carphone Warehouse continues its development. And nowhere is progress more evident than in procurement.
Around 18 months ago the group set up a global procurement function to manage its £1.4 billion of spend, around £800 million of which is negotiable with third parties. And now it says it is ready to take the next steps on its procurement "journey".
"We have had a lot of success in taking cost out - the easier wins," says Graham Stapleton, group managing director of procurement and purchasing. "We concentrated much more on renegotiating existing contracts and looking at big areas of tendering and spend and getting value that way."
"It is quite a different proposition in the next 12 months. It is a change of emphasis, from reacting to being more proactive to create more value," adds Michael Whitby, the firm's new group procurement director.
Stapleton says the firm is on track to deliver £35 million savings in the first year, exceeding its target of £20 million. He adds savings have been independently audited by the finance department and have been tracked, recorded and measured.
"The value that has been delivered is significant," says Whitby. He adds that because the business recognises the savings are real, it expects them to continue to be delivered, alongside new strategic plans.
The size of the team has grown from zero to 25 buyers spread across the group's business following a big recruitment drive. Two interim procurement chiefs have held the reins since the global procurement function was set up. But while this has bought a mix of experience, Stapleton says now is the time for continuity. "We made the decision last year to bring in an interim while we found the right person. If we had bought in Michael 12 months ago it might not have been the right time for him - the procurement team was so immature and there was a lot of firefighting and battles that potentially his skillset wouldn't have been right for."
He adds the role's recent elevation to director level (News, 2 August 2007
), which might have been "premature" 12 months ago, demonstrates the progress of the function.
And training and development of staff will be a key goal for next year, with internal and external programmes to share experience and best practice in the team.
Spend visibility and category management will also be strong focuses over the next year, as Stapleton says "not £1 is out of scope" for the function. "To be able to deliver the aspirations we have in the business next year we are going to have to look at all the categories we spend money in. Earlier on we could afford to pick and choose [categories] a little bit more. We haven't got that luxury and we shouldn't want to operate in any other way."
The procurement team is also boosted by its close relationship with the goods-for-resale (GFR) purchasing team. "I lead the GFR and goods-not-for-resale functions. So for any synergies we've got in terms of best practice, from how we manage preferred partners all the way through to collaborating on spend, there's a hell of a lot of opportunity to integrate it," says Stapleton.
But tougher retail conditions won't change the team's strategy in the future. "We are not just here to help facilitate some contracts, we're here to show a very good commercial return."