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4 October 2013 | Will Green
An overhaul of indirect procurement at John Lewis Partnership (JLP) has produced savings of more than £90 million since it was launched three years ago.
The project involved setting up a centralised procurement department to take care of indirect spend across the partnership’s four divisions, which include the big trading divisions of John Lewis and Waitrose.
Todd Bradley-Cole, procurement planning and support manager, said in the past separate departments took care of their own procurement needs, with “hubs” of specialists dealing with items such as IT or vehicles, but “most of the other stuff was done ad hoc”.
“The partnership is very good at buying goods for resale but the goods not for resale, there had been nothing really,” he said.
The changes involved creating four spend categories of property, retail and distribution, professional services and print and marketing. Recently IT was also added.
Each year JLP spends up to £1.4 billion on indirect procurement. “If you have that kind of spend you should have processes and people in place to manage that effectively,” said Bradley-Cole.
“Trying to get the whole partnership to have a similar spec is an area of challenge and opportunity.”
The 60-strong indirect procurement team “engages with the people in the partnership and works with them to identify ways to improve value”, as well as focusing on “getting robust contracts in place” and risk management.
Bradley-Cole said of the savings: “This is not purely about price. This is a mixture of price, cost avoidance and where we have managed to get added value. There are elements of volume deals.”
He said a key challenge was around changing the culture of the organisation.
“Procurement can be seen as a difficult area because people don’t always want to change. They find it a bit challenging,” he said.
“We’re having to become more commercial and tough in our dealings. It’s not a charity, it’s a commercial organisation.”