3 August 2010 | Lindsay Clark
Buyers at retail giant DSG international (DSGi) have helped the firm return to profit by doubling annual indirect savings. The advance came despite a reduction in procurement team numbers.
The buyers saved £23.8 million in 2009-2010, up from around
£12 million the previous financial year, according to Rob Douglas, chief procurement officer at the group, which includes Dixons, Currys and PC World.
In June, it reported a financial turnaround with pre-tax profits at £112.7 million, compared with a loss of £123.6 million in 2008-09.
Douglas said the improved procurement performance was achieved despite cuts in the buying team, whose numbers fell from 17 to 13. As a result, return on investment (ROI) per person had gone up. Every pound spent on salary created a £25 saving on the bottom line during 2009-10, up from £9 in 2008-9. Douglas expected the figure to be £32 per person this financial year.
“We are now mature in our sourcing capability and the appetite of the organisation has gone off the scale for finding and implementing improvements in value,” he said.
“We’re very well embedded in areas of the business in which sourcing does not always traditionally get involved.”
For example, his team has worked closely with the marketing department to help it understand ROI on in-store buyers’ guides. Marketing had been spending around £2 million on paper guides which quickly became obsolete and which would often be thrown away, creating spending on waste removal, he said.
The firm now produces email and web-based customer guides.
“This is a classic way of blending sourcing and revenue generation,” Douglas said. “The content is dynamic, including video, so it provides much better supplier sponsorship and advertising opportunities. This is able to drive more revenue and they’re a third of the cost.”
In another revenue-generation initiative, DSGi will start selling advertising on in-store demonstration TVs.
“We have 91 million people over our threshold every year, so we are turning that into an advertising medium,” he said.
“You have to be careful because it has to be neutral or positive to the customer experience.”
This project was expected to drive £1 million in revenue, he added.