Coupling procurement with HR created fantastic results, said Andy Stephenson of Lookers © Leo Wilkinson
Coupling procurement with HR created fantastic results, said Andy Stephenson of Lookers © Leo Wilkinson

How HR and procurement collaboration saved £1m

26 October 2017

Procurement’s due diligence and HR’s employee insights created impactful results for Andy Stephenson, now group people director at automotive distributors Lookers.

Stephenson was speaking about cross-functional collaboration at the CIPS Annual Conference 2017.

While at his former firm DFS, procurement and HR had worked together to reduce fleet emissions and increase employee engagement, he explained.

The company had previously purchased all company cars from a single supplier, which delivered great savings but at the expense of employee satisfaction, due to a lack of vehicle choice, Stephenson said.

By bringing together HR and procurement, the teams discovered they could offer more expensive vehicles, which actually worked out to be cheaper in the long term because of their resale value, more efficient engines and less costly service charges. 

The HR function then educated the employees receiving the cars on how it would affect their tax rate, leading many employees to “self-select down”. HR and procurement then worked together to move to a single supply deal on fuel.

The whole project saved the company more than £1m, reduced fleet emissions by 13% and increased employee engagement scores.

“[HR] brought the people side of the argument and procurement brought the robustness of the contracts needed to make that work,” Stephenson said.

Stephenson found a similar case when he arrived at his current company Lookers, this time surrounding company mobile phone contracts, he said.

He explained that there was a seemingly excellent cost-effective supply contract, where the company only spent single digit pounds per handset per month. 

However, the contract was at odds with the company’s new policy of encouraging employees to work away from the office and the home, which resulted in large expenses for Internet access in hotels and trains and data packages employees had added on.

The HR function then ran focus groups about how employees wanted to work and where, giving the procurement function a clear set of definitions about what to go and buy and what kind of contract to negotiate with suppliers.

Procurement then negotiated a deal with suppliers, which not only reflected the company’s work policy but also saved tens of thousands of pounds. 

“By bringing the robustness and due diligence that procurement does around the contracts and supplier management and coupling it with HR’s insights about what employees actually do and the psychological behaviours that people are going to do—put those two together and we can get powerful savings across the organisation,” he said.

“Our functions are very similar,” Stephenson concluded. “We are both cost centres to our businesses that actually supply resources to it. In our case, it happens to be people and the case of procurement it is supplies.”

He added: “HR functions love to spend money, but the more we can work with procurement to generate savings, the more we can reinvest in engagement activities.”

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