Delivering £260m in cumulative savings to National Grid

Efficio helped National Grid to transform its Procurement operations while delivering £260m in cumulative savings to the business.

This permitted extensive investment in new procurement processes and technologies, as well as training and coaching to fundamentally lift the capabilities of the in-house team.

Background

National Grid is one of the world’s largest investor-owned energy companies and plays a vital role in delivering gas and electricity to millions of people across Great Britain and northeastern US. It has an annual turnover of £14bn.

National Grid embarked on a radical Procurement Transformation programme to redefine the ways of working for over 200 procurement professionals in the UK and the US.

Efficio supported National Grid on its journey of Procurement Transformation. The programme began by developing a business case for a multi-wave Strategic Sourcing programme combined with extensive organisation, process, people and technology changes.

During a period of over three years, Efficio worked hand in hand with National Grid in the UK and the US, and played a central role in delivering a highly successful Procurement Transformation programme.

The joint National Grid – Efficio team delivered annualised savings of £160m, based on an addressable spend of £1.8bn.

Approach

Using our deep Procurement Transformation capabilities, Efficio helped National Grid to successfully:

• Embed a strong Programme Management Office (PMO) to develop plans, control finances and manage a large number of resources and stakeholders
• Create 18 sourcing teams across National Grid’s entire Opex and Capex spend; most of these teams working globally for the first time
• Manage a multi-year programme based on delivering sourcing savings while simultaneously transforming the team. This was achieved through full involvement in the sourcing process, combined with formal training (20,000 training hours over the first nine months)
• Embed a rigorously followed “gated” global sourcing process, which was vital in securing buy-in from across the business
• Review and redesign the global Procurement organisation, refocusing it on a category management-driven approach
• Embed a single National Grid Strategic Sourcing approach, which has been adopted globally. All new hires receive an initial three day formal training
• Select and implement fit for purpose procurement technologies
• Develop and implement a set of KPIs to measure procurement performance over time

Results

Efficio’s engagement helped deliver a number of significant benefits for National Grid, including:

• Delivered £160m in annualised savings, based on an average of over 10% savings per category, equating to cumulative savings of £260m
• Designed and implemented a new Procurement organisation
• Implemented new global processes and enabling technologies
• Developed strong relationships within the lines of business
• Upskilled the existing Procurement team through a major training and development programme