Rolls-Royce deploys the power of Thor in procurement

Paul Snell is managing editor at Supply Management
19 April 2013

Invoking the image of Thor, the Norse god of thunder, has allowed buyers to change the perception of procurement at Rolls-Royce.

The global indirect procurement function at the engineering business has recently undergone a transformation programme to change the way it manages its rising spend as the company expands.

According to strategic programmes executive Mikkel Lykke Larsen, calling it ‘project Thor’ has raised the profile and improved the image of buyers.

“Thor is a Norse god of war, but also for courage, and from a branding perspective it gives us a lot of opportunities to create some good stories that are communicated across Rolls-Royce. People know this quite well,” he told delegates at the ProcureCon Indirect conference in London this week.

“It changes the perception of me when I come to them to talk about cost, because people see this as a vehicle they associate with training and collaborative cost reduction, as opposed to purchasing coming to beat up suppliers.”

He said the project has been primarily about “changing our culture, ambition, engagement and capability of our people to go out an influence our internal stakeholders” to deliver a significant and sustainable contribution to the business.

The project, which started in 2011, had four main areas.

       Rapid re-pricing. This involved renegotiation with the company’s biggest 50 suppliers to make savings.

       Category ‘deep dives’. Taking a more holistic view of spend.

       Sector sourcing. Encouraging buyers to address spend globally, and turning them into “spend entrepreneurs”.

       Improving staff. Making sure the company recruits and retains the right calibre of people to ensure the savings made stick.

Larsen said a key factor of the project’s success was giving people time to focus on it. “In order to do strategic sourcing initiatives, it is quite difficult if you are a buyer that has purchase orders you need to raise, or parts you need to chase in the organisation,” he said. “That will always crowd out the strategic sourcing aspect, so we had to create space and reorganise internally in global indirect so people could actually participate and prioritise being in a cost reduction programme.”

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