South African Breweries targets global procurement

3 November 2010
Southern Africa must focus on sustainable sourcing
Supply warning for southern African firms
Mozambique reverses bread price rise
Procurement goes global at SABMiller

Beer money for Heineken as supply chain makes savings

3 November 2010 | Nick Martindale


Developing a global procurement strategy while building sustainable relationships with local suppliers are the priorities for procurement at South African Breweries (SAB) over the coming year.

Ian Russell, who was appointed head of commercial in October, told SM he would work to globalise the supply chain where possible as part of its parent company SABMiller’s strategy. In November 2009, the international firm set out to save £180 million a year by 2014 by centralising the management of three departments – procurement, HR and finance.

However, Russell said this effort needed to be balanced with local priorities. “We can globalise procurement of glass and packaging but we want to make sure that we retain the local characteristics of the beer.

“It’s about co-operating and collaborating globally while making sure that locally you retain the flexibility that you need.”

The business would also look to adopt global standards for raw materials, even where these would continue to be sourced locally.

“Procurement of hops and barley will be done locally but there are a number of things that you are able to standardise at a global level, whether it’s the yield from a crop or the quality,” said Russell. “There’s a lot of global benchmarking work that you can do on a supply chain.”

SAB would also continue working with local suppliers to develop long-term, sustainable relationships. “This is not an industry where you can pledge to buy barley from one farm one year and another the next,” said Russell.

“You have to plant it and look after it multiples of years in advance so the focus is very much on relationships which drive value for both us and the farmers.”

Having locally produced sources of agricultural commodities such as wheat, barley and hops gave a degree of protection against price fluctuations, added Russell, but this was something the company had to keep under review.

“Where we know we’ll need to import we’ll look to adopt a hedging strategy,” he said. “The one thing that’s working in our favour at the moment is that the rand is very strong against the dollar, which helps mitigate some of those increases.”

Russell was formerly chief procurement officer at Absa Group and has also worked for Barclays and Ford in the UK.

SAB’s southern African headquarters are in Johannesburg but SABMiller also owns breweries in Mozambique, Angola and Swaziland and operates joint ventures in Botswana, Lesotho and Zimbabwe.

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