The first ever class C purchases barometer has arrived

Class C purchases
July 11th, 2019
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Indirect purchases, particularly class C, non-strategic and one-off purchases, pose a real challenge for companies in terms of their competitive edge. However, very few companies have a comprehensive overview of their level of maturity in managing class C purchases. Similarly, they have little insight into the maturity of the industry leaders or indeed the industry average.

To meet this need, Manutan has just released the first ever class C purchases barometer for the construction industry.

The purpose of this barometer, based on the Savin'side® method, is to provide an industry-specific situational analysis of the management of class C purchases within French organisations, as per the company's NAF code[1].  

Savin'side®: A method for optimising class C purchases

The Savin'side® method enables companies to optimise their class C purchases and make substantial savings.

It takes six areas into account when examining a company's class C purchasing habits, in order to pinpoint sources of hidden costs and identify the most suitable optimisation levers. These areas are:

  1. Supplier rationalisation
  2. Product optimisation
  3. Digitalisation of transactions
  4. Supply chain optimisation
  5. Deployment of the agreement
  6. Quality management

Class C purchases in the construction industry

Manutan has released the first class C purchases barometer for the construction industry, based on the Savin'side® method.

The construction industry is a good way to gauge the health of the French economy and today accounts for almost 8.6 billion euro of investments into class C purchases[2].

The study reveals that construction companies are actually reasonably mature, with a Savin'side® rating of 3.1/5. On average, these companies spend 58 euro on class C purchases per employee per year[3], using a supplier contract negotiated by the procurement department.

In this industry, the average amount spent per year on class C purchases is 100 euro per employee. This represents a loss of 42 euro, primarily due to unscheduled purchases made outside of the company's procurement policy.

In addition, there are significant disparities depending on the size of the company.

Some 43% of companies, mostly small organisations, outperform their larger counterparts with an average Savin'side® rating of 3.7/5. On average, they spend 65 euro on class C purchases per employee per year, and these are made within the framework of a negotiated contract.

In contrast, the average Savin'side® rating for large companies dropped to 2.6/5, while the average expenditure per employee fell to 41 euro per year. This can be explained by the intrinsic organisation of large companies that manage multiple small sites. It seems that, through their organic and/or external growth, large companies are struggling to enforce their centralised procurement policies at their smaller sites.

Finally, the management of class C purchases within the construction industry varies greatly. Two intrinsically linked challenges remain: the deployment of contracts and the digitalisation of transactions.

 

 

A new industry will be analysed each quarter. The next industries to be examined will be the transport, automotive, energy, aviation, petrochemical and service industries.

 

[1] French industry classifications

[2] Calculated using the annual turnover provided by French magazine Le Moniteur in its ranking of the top 1000 French construction companies

[3] According to our estimates, the potential expenditure generated in the construction industry is 100 euro per employee per year.