Compass Group PLC: Supplier Consolidation
Compass Group PLC is a British multinational contract foodservice, cleaning, property management and support services company. The central commercial function provides purchasing and procurement support to all sectors of the group.
The strategic acquisition of PPP Infrastructure Management from Semperian Investment Partners in 2011 brought with it a number of existing FM support services contracts spread across the UK in Education, Defence and Healthcare sectors. As part of the overall activity to integrate PPP into its business, Compass recognised that there was a need to review PPP’s complex supply chain and procurement processes.
CMI were engaged to review and consolidate PPP’s existing supply chain and leverage £400k of annual savings through migration of annual service contracts to Compass Group approved suppliers.
In addition, CMI were tasked with reviewing the procurement and contract management processes and to design and implement new ways of working to comply with the group’s commercial procedures.
CMI engaged with PPP’s commercial manager to identify all service contracts across the business’s ten sites, which were geographically spread across the UK. Utilising local account managers from key Compass Group suppliers, CMI was able to quickly get quotes for annual service contracts and identify quick wins and early savings.
CMI adopted a pragmatic approach and where necessary, convinced the central commercial team to retain key local suppliers where quality, service levels and KPIs were better served. This secured the support buy in from PPP’s site managers and staff.
Finally, for more complex and specialist contracts, CMI pulled together tender requirements and competitively tendered contracts to improve service performance and leverage savings.
CMI successfully delivered the project and reduced the number of suppliers by a third and leveraged savings in excess of £400k per annum. CMI also designed and implemented new procurement processes with the business to ensure ongoing compliance with Compass commercial procedures and left the business with a plan which would generate further saving as existing contracts came up for tender.
Mick Morgan, the Group’s Project Sponsor and Commercial Director said,
‘CMI helped us reduce PPP’s supply chain by a third and delivered savings of £400k p/a. Integrating our tendering process within the business has enabled us to expect further savings in the future.’