17 November 2010 | Angeline Albert
Construction giant Carillion is to cut 20,000 firms from its supply base as part a streamlining action plan.
The group has approximately 25,000 suppliers but will reduce this figure to 5,000 to save £140 million a year by 2013.
Carillion said the move was part of its ‘Step Up’ performance plan agreed a year ago to tackle the fact that too many of its suppliers were not used.
A spokesman said: “We have more suppliers than we need. Many were inherited from the acquisitions of Alfred McAlpine in 2008 and Mowlem in 2006. Since 2008, we’ve had different business improvement initiatives to help us do things smarter, better and faster.
“This is a case of clearing things up and working with a smaller number of suppliers. Decisions about which suppliers to use are based on factors such as price, quality, sustainability, ethics and reliability.”
Carillion currently spends £3.5 billion a year with vendors. The Step Up plan has so far saved Carillion “tens of millions of pounds”, the spokesman said.
In May 2009, SM reported that Carillion’s business services division, which accounts for more than half of the company’s £2 billion annual spend, had cut its number of suppliers from 45,000 to 20,000 over the preceding six months. It aimed to get the number down to 10,000 by the end of 2009.