New procurement system

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15/12/2009

New procurement system

The Management Committee of FCC decided yesterday (Monday, 14 December) to implement a new centralised procurement system in order to reduce costs and improve the organization's efficiency. The new system encompasses procurements by all the group companies' business units.

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FCC spends approximately 9.2 billion euro on procurements each year, i.e. 66% of its revenues. The newly-created Procurement Department within the Administration and Information Technology Department, aims to provide corporate and business units with a new approach, supported by an internet-based supplier relations management tool, that has a direct impact on the bottom line. A one-percentage point reduction in the total amount of procurements would be equivalent to one-third of group net profit at this time.

Before the model is implemented, the Group's procurement situation will be analysed to ascertain the structure and position of the procurement organization and the procedures and tools it uses.

Among other features, the new system envisages drawing up a Corporate Procurement Policy, establishing and implementing new procedures, and developing procurement rules and plans for negotiations with suppliers. A key feature of the model is a separation of the procurement functions: managers will decide on procurement needs and specifications and analyse bids from a technical standpoint; and the Procurement Department will manage bids and negotiations. The final decision will be taken by a collective body, the Procurement Committee, which will include managers from the business units. Procurement processes will vary depending on the specific nature of the item being acquired, the amount, business dynamics, etc.

The ultimate goal is to take full advantage of the synergy and procurement capacities existing within a group as large as FCC and to use the most advanced technology in procurement to contribute to the businesses' development and profitability.

The new system will be rolled out gradually, beginning in Spain in January. All procurements susceptible to centralisation will be added in June, and other countries will be brought into the system in two phases commencing in the second half of 2010.

The initiative is part of the Strategic Plan 2008-2010, whose goals are to consolidate the current businesses, seize opportunities for growth, and increase the organization's efficiency.

Produrement.pdf