Purchasing power

11 September 2012
The Co-operative Group is the UK’s largest mutual business, owned by more than seven million consumers. It is the UK’s fifth biggest food retailer, the leading convenience store operator and a major financial services provider, operating both The Co-operative Bank and The Co-operative Insurance. Among its other businesses is the UK’s largest funeral services provider and one of Britain’s biggest farming operations. The group operates over 4,800 retail-trading outlets, employing more than 100,000 people and has an annual turnover of more than £13 billion. As well as having clear financial and operational objectives, the group has also set out its social and sustainability goals in its groundbreaking Ethical Plan, which specifies almost 50 commitments. It is also dedicated to reducing its greenhouse gas emissions and energy usage. Having reduced its emissions by 35 per cent, it now plans to reduce them by 50 per cent by 2020. The vision is to build a better society by excelling in everything we do. I set up a new energy team in 2011. My main objective was to deliver energy efficiency projects within a capital budget – a programme previously delivered on a tactical and regional basis without support from group procurement. A new relationship was formed between the two departments to deliver energy-saving projects, which were already being trialled but needed to be implemented nationally within tight timescales. The energy team had established relationships with a number of existing suppliers, but they had never been taken through a thorough procurement process. Since group procurement’s involvement, the energy team has received a professional approach to sourcing, commercial negotiation and project delivery. The combination 
of the energy team’s technical expertise and group procurement’s commercial acumen enabled us to proactively challenge the costing model and specifications to ensure the best result for the organisation. This joined-up approach and support from group procurement has achieved significant common goals, including energy and environmental operational efficiencies as well as savings. This value has resulted in more stores being retrofitted within the original capital budget. Across all projects, more than £2.8 million savings have been delivered, with an average saving of 36.5 per cent per project. In 2011, the in-year savings will be more than £6 million on energy bills within the capital budget of around £10 million. The added benefit of working with procurement is it’s not just about agreeing the rates and handing a project over. The team not only delivers significant savings, but demonstrates excellent support and delivery of project implementation to include robust service levels with 
key performance indicators, which previously 
would have been managed on an ad hoc basis. Benefits and key learning points 1. Ensure procurement strategy is aligned to business strategy. 2. Involve procurement as early as possible. 3. One procurement manager should manage all energy projects for consistency. 4. Have a clear understanding of each other’s objectives, roles and delivery within the team. 5. Develop good relationships across each other’s teams – include technical stakeholders. 6. Understand the energy saving impacts from the areas/products you are reviewing. 7. Procurement has a great process to take its stakeholders through, known as the supplier management framework. ☛ Alex Pitman is the energy 
and carbon manager for 
The Co-operative Group
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