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31 October 2012 | Anna Reynolds
Balfour Beatty is integrating procurement at its six operating companies into one ‘enabling function’ in a restructure designed to drive efficiency.
As part of a major reorganisation, Balfour Beatty Construction Services UK division is centralising support functions such as HR, finance, procurement and IT.
The division currently consists of six operating companies: Major Civil Engineering, Regional Civil Engineering, Construction Northern, Scottish & Southern, Engineering Services and Mansell. It is merging these into one from January 2013. As a result, procurement and supply chain teams across these organisations will be moved from 30 offices into four hubs in Edinburgh, Manchester, Bristol and London.
In addition to these hubs, a transactional desk is being set up at the company’s shared service centre in Newcastle, where a team of around 40 will now manage all low-value procurement transactions. Balfour Beatty supply chain director Andrew Haworth said the company currently carries out around 150,000 transactions a year, 130,000 of which are for low-value items including building materials and plant equipment.
Under the new structure, low-value items can be bought by individuals using a purchasing card and an automated catalogue system or via the transactional desk. Category managers are also in place to assist with other transactions not considered as overhead spend, such as temporary accommodation for sites.
Speaking to SM, Haworth, who was brought in last year to oversee the changes, said: “Procurement teams no longer have to get involved in ordering low-cost supplies. The transactional desk means anyone can do it. Now we only have 20,000 procurement transactions that need attention.”
The restructure will result in 650 redundancies across the group. According to Haworth, a number of these will be in procurement-related areas of the business. “Of course savings will be made in terms of head count, but overall there will be much more effective procurement,” he said.
As part of the restructure, a central procurement team – Supply Chain Solutions – has been set up and is in the process of being staffed. It will consist of 13 supply chain managers who will work alongside manufacturers that supply sub contractors to Balfour Beatty. The team will get involved in bids and seek out innovative and effective design solutions.
In addition, a team of around 60 senior procurement managers will be put in place to oversee larger, more complex deals. Furthermore, specialist teams looking after IT, fleet and plant spend will streamline all indirect procurement processes.
Throughout 2002-10, Balfour Beatty bought several independently operating UK companies, including Mansell. Haworth told SM: “When the recession hit, we realised this way of working was holding us back from expanding globally. Consultants told us we weren’t doing our procurement well either.”
Balfour Beatty set up divisions for capital investment, professional services, construction services and support services, with construction the biggest area of spend. “The process we have carried out in the Construction Services division is now being repeated across the companies’ support service business,” said Haworth.
Pilots of the transactional desk are currently operating in Sheffield and Scotland. These will shortly be moved over to the shared service centre in Newcastle.
The company would not confirm the extent of savings expected to result from the procurement restructure at the Construction Services division. However, overall it expects to save £50 million a year by 2015 across the whole of its international group.