Procurement overhaul at John Lewis saves £90 million

3 October 2013

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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.”

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