5-Year Procurement Target at British American Tobacco

| Succesverhaal

Consulting services from Capgemini yields quick-wins, encouraging the Group to raise the bar

It’s a major change activity adding millions to the bottom line that needed best
practice materials and people.” 

Geoff Wells, Global Indirect Programme Manager, British American Tobacco

The Situation

Continuously improving productivity helps British American Tobacco invest in
brands and secure earnings growth. To remain competitive, the group sought reduced
complexity and costs across its entire supply chain. Two years ago, it announced
a commitment to reduce annual overheads and indirect costs by an initial target
of £200 million per annum by the end of 2007.

The Solution

Historically, British American Tobacco had managed indirect procurement activities
in its end-markets each with dramatically varying levels of maturity.  Introducing
global consistency across the organization was a key aspect in delivering the
aggressive targets. Integrating and implementing a common “best practice” organizational
set up, processes, policy and a  single instance procurement system within its
ERP environment would optimize supply chain performance, enable the  reduction
of  indirect spend and ensure compliance.

Capgemini was entrusted to help the company steer the program and a joint team
opted for a phased approach that initially focused on British American Tobacco’s
top 14 end markets. These markets accounted for some 70% of the total indirect
expenditure.

The Result

British American Tobacco is now buying more efficiently by leveraging its professional
procurement people, process and global presence for improved economies of scale.
Having saved £64 million and a further £89 million in the first two years of the
program, the group has twice raised its five year savings target on overheads
and indirect purchases to the current figure of £400 million per annum by the
end of 2007.