Actioning a New Sourcing Value Levers Framework at ABF plc

The purpose of this thesis was to explore and implement the new sourcing framework to achieve financial and non-financial benefits of a more closely aligned sourcing and contract management process at Associated British Foods (ABF) Plc. The company has a decentralized procurement organization but wants to benefit from scale by employing tools and processes other than centralization of procurement. The problem was that central ABF sourcing value leverage (SVL) was not clearly defined or utilized at scale and the value of this was not claimed above individual brand level. Therefore, the aim was set to determine if ABF brands would benefit from leverage in supply, demand, and process leverage driven by the ABF procurement organization. The thesis also aimed at driving clear contract compliance and delivering savings by contracting together between several ABF group companies. The thesis employed a blended theoretical and action research process for the analysis of the current state. The theoretical framework was based on existing SVL models, models of organizational maturity and strategy at procurement organizations. A set of surveys and interviews were conducted with internal stakeholders and proved the need for change. As a result of the thesis, a new 4C’s SVL framework was proposed specifically for ABF. The new model centers on several distinct levels of brand level communication and purchasing process integration to secure value. The implementation of research was focused on supply management and contracting. A major European pilot study was conducted in June 2022 in the procurement of corrugated containerboard at several diverse ABF brands. A set of unified rules and contracting terms of supplier engagement were applied to meet delivery and service requirements. These actions resulted in a financial benefit of an average of 8% of additional savings versus brands contracting individually. It also assisted with joint communication strategies in finding alternative sources, consolidating supplier strategy in Europe, and determining the best value total cost of ownership (TCO) in the corrugates category. Keywords: Sourcing Value Levers (SVL), Demand Management, Supply Management, Performance-based Contracting and Supplier Collaboration, Design-to-Value, Purchase-to-Pay (P2P)