30 September 2010 | Lindsay Clark

BDR Thermea’s new procurement function has achieved dynamic results despite tough economic times and a company merger

CATEGORY:  Most improved purchasing operation – start-up

Ten per cent burn. No, it’s not a fitness regime – it is the procurement initiative that has helped BDR Thermea, a manufacturer of heating and hot water systems, save €30 million (£25 million) in a year and earn this award.

With a turnover of €1.8 billion (£1.5 billion), the company sells in more than 70 countries and employs 6,400 people. Not only did the procurement team drive through change within a year, but during a tough time for the business and economy.

When Andrew Vaughan was appointed group procurement director in January 2009 to lead the new procurement function, the world was still in recession. BDR Thermea was known as Baxi Group and owned by venture capitalists BC Partners, which had become heavily indebted. The organisation saw procurement as a tactical function with no group influence, so it was vital to show how the function could create value.

Before joining the company, Vaughan gathered feedback from each country lead. Then he held a group procurement conference where job descriptions were written and titles realigned. Each local representative was set targets to drive cross-functional collaboration and goals within their region. The team introduced a five-step approach to encompass the procurement life cycle; continuous improvement; tools and techniques to support delivery; a communication plan; and “10 per cent burn” branding for the initiative to drive engagement internally.

When, in September 2009, Baxi Group and the De Dietrich Remeha Group merged to form the BDR Thermea 
Group, the procurement team held “synergy workshops”.

Within 12 months, procurement moved to the forefront of the business. As well as the headline €30 million savings, other measurable benefits include a €1 million (£830,000) cashflow improvement and a 25 per cent reduction in the function’s 12,000 suppliers.

Procurement has also improved product quality, and now has the visibility to drive the carbon-emission reduction effort globally by working with key suppliers.

Before the merger was completed in November 2009, Martyn Coffey, CEO of Baxi Group, said: “The new procurement organisation’s contribution has allowed us to achieve excellent bottom-line profit numbers in a tough year for sales.”

Also on the short list

BPP; CARE UK; Cirrus Purchasing; Research Councils UK Shared Services Centre; Skandia UK; The Caravan Club