VolkerRail gains control of direct spend, suppliers and the order processing and indirect procurement costs

Objectives

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.

Benefits

“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.”