Rolling out procurement services for a global bakery business

This is a multi-billion dollar global leader in bakery ingredients, products, and services for retail and food service markets, as well as artisan and industrial bakeries.

Challenge

Following the acquisition by Private Equity, our client embarked on a significant program of cost-base optimization. The savings would not only allow the new owners to pay down debt faster but also fund several growth initiatives that would accelerate top-line growth and EBITDA. 

The new owners wanted to create a centralized and global approach to procurement, which had hitherto been decentralized and local in execution. The legacy indirect procurement team consisted of a small number of individuals located in key manufacturing sites around Europe. 

Despite having strong relationships, the capability to drive rapid cost optimization and growth improvement initiatives did not exist within the in-house team. The Group CPO installed a Head of Indirects and ran a short selection process to identify a cost reduction and change partner. 

Approach

Proxima was engaged to build a central procurement function, firstly in Europe and then globally. The function needed to operate across a complex geographic landscape, reaching out into a manufacturing base that had previously been left to make their own decisions. We put in place a multi-skilled, multi-national team based out of the Netherlands and the UK, traveling regularly to key stakeholder locations. 

The new owners set the team challenging savings targets. We approached these by running an initial Opportunity Assessment to build a pipeline of savings activity. Once delivery was underway, we were able to build credible relationships and create more integrated category plans, delivering more complex projects and the next generation of benefits.

As the reputation of procurement further built, Proxima was asked to deliver globally, relocating leadership of the account to Atlanta and recalibrating the service and targets accordingly. During subsequent years we were engaged to support divestments, further ownership changes, major factory builds, and direct materials.

Results

The function delivered across ten major markets in North America and Europe. The team exceeded all savings targets and established a pull for procurement services, with stakeholders buying into the concept and quality of a central specialist team.

Over the program’s lifecycle, we delivered more than 15% bottom-line cost improvement, significantly contributing to EBITDA improvement and sale multiples. We also implemented the commercial infrastructure and capability that made the organization a better business. This included;

• Influencing over €500m of third-party spend and delivering significant cost and quality improvement while reducing supplier numbers by 30%
• Supporting the build of a €20m new production line and putting in place supplier solutions that increased productivity by 23%
• Putting in place the capability to monitor €1bn of key commodity markets and activity risk manage €200m