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VolkerRail gains control of direct spend, suppliers and the order processing and indirect procurement costs
No. of employees:
Standardize the entire ordering process up to invoice processing.
Transparency of commitments and direct spend.
Connection to existing ERP system.
How Proactis helped
Employees can order from pre-approved suppliers.
A clear dashboard to provide insight across the entire process.
Orders are placed according to the correct guidelines and procedures, thanks to an automated authorization flow.
Drastic reduction of administrative work.
Five percent saving on total indirect spend.
The procurement and expenditure flow is fully automated, so procurement can now advise based on data.
By setting up a structured process, we got a grip on our direct spend, suppliers and the indirect costs of the purchasing and ordering process.
Procurement Manager at VolkerRail and VolkerWessels
From new energy-neutral homes to the construction of the largest sea lock in the world, the VolkerWessels group manages everything in-house. Traditionally a family business, it has grown into an international and listed construction group with 16,000 employees. It is mainly active in the Netherlands, the United Kingdom, North America and Germany.
Think global, act local
is how it does things. Decentralized autonomy has brought a lot of entrepreneurship to VolkerWessels and as a result, the group was able to grow into an organization with 120 local operating companies, which operate as independent businesses. The VolkerWessels companies each have their own profit and market responsibility, but they are also part of a close-knit internal network. VolkerRail, part of the Infrastructure Netherlands division, is responsible for building up the availability of the Dutch infrastructure. Originally this was mainly rail, but now the company is also working on locks, bridges and airports. In total, the company employs approximately 1,200 people.
Cost savings and more efficient business processes are current themes in the construction and infrastructure sector. This also applies to VolkerRail. Since its listing on the stock exchange in 2017, the need for transparency has also become even greater, predominantly to create more synergy in procurement between the operating companies. A mission that Lucas ten Brinke, now Manager of Procurement at VolkerRail and VolkerWessels Infra-ICT, Asset.Insight and Procurement Division Coordinator, took on. The new motto became "Transparency leads to control. Control leads to cost awareness. And cost awareness leads to cost savings". From there he started the search for an optimal purchasing process. Ten Brinke stated: "When I joined the organization, I wanted to map out the spend. But we only knew what we had purchased when we received an invoice. There was insufficient insight into the entire process that preceded this. From the order request and approval to the purchase order and delivery.”
This had to change. By harmonizing these processes and setting them up more efficiently, better control over the total flow of orders and expenditures made by employees was possible. Standardization in processes opens the door to better control information and also provides more transparency of, among other things, outstanding commitments and direct spend. The objective was to automate the entire ordering process up to and including invoice processing throughout the organization and to have all purchases run via a single ordering system. The focus here was more on “non product-related” purchasing (NPR), such as office furniture or protective clothing for mechanics. For project-related purchasing, VolkerRail worked with existing ERP systems, wanting to ensure approval for orders that were run via the new system.
How Proactis helped
After a thorough selection process, Proactis came out as the best solution. Ten Brinke added: "The decision was mainly through experience, thinking about our specific situation and the fact that the platform connected to our application landscape. The maturity of the solution also gave us the necessary confidence. Additionally, Proactis can connect to our existing ERP system and from these two applications, VolkerRail employees can order the articles and services specifically for projects. The authorization for orders had to come from the HR system, so the implementation was complex, but we are currently very satisfied with the solution.”
The new way of working, supported by the Proactis platform, makes it possible for employees to place their orders online, from any device, from approved catalogs. The orders are then forwarded to selected suppliers. As a result, fewer links are needed in the process. In addition to the ease of ordering and time savings, it is also possible to save on process costs. The system enforces approval with an authorization flow, so the Purchasing department has certainty that purchases are made according to the correct guidelines and procedures. This makes maverick buying a thing of the past. Moreover, the status of budgets and how much spending space is still available is immediately visible. This not only helps to better monitor budgets, but employees also immediately see the costs they have incurred. This contributes to greater cost awareness within the organization.
“As a team we have made great strides in the professionalization of the procurement process", says Ten Brinke. "We have been the most eye-catching Purchasing department in the group for four years. I'm quite proud of that." The new working method is clearly beginning to bear fruit. Among other things, it is now clear how many products of a product group are ordered from VolkerRail, but also how the expenditure is in relation to the budget. With the push of a button, the Purchasing department can find out how many specific products, from construction products to safety shoes, are purchased each year. Ten Brinke noted: "We can make an overview of employees who make use of discount agreements we have with suppliers. What's special is: if you make that transparent, employees will steer their own course in that direction".
Ten Brinke states that while it is still too early to talk about concrete figures, he estimates that VolkerRail has already been able to save at least five percent of the total indirect spend. In addition, the number of hours spent on administrative work has been drastically reduced (by four FTEs). While employees had to get used to the new working method, the correct attention and information from the project team and the sounding board group gave the users confidence in the system. According to Ten Brinke, the biggest advantage is that the system provides valuable control information to gain detailed insight into the flow of expenditure. "And we can now measure whether we are compliant in our processes and contracts.”
All this is clearly presented in dashboards, to help to further optimize processes and better align contracts with suppliers to the needs of employees. Ten Brinke concluded: "All this means that we are more involved in negotiating master agreements and contract and supplier management in purchasing. All in all, that brings procurement to a more strategic level. We can now get round the table with suppliers to discuss how they can offer added value to us, in areas such as innovation, sustainability and special techniques.”
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