SAFEROAD CASE
WHEN 106 LEGAL ENTITIES ARE WORKING LOCALLY, POTENTIAL SYNERGIES ARE LOST
ONE HUNDRED UNITED
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he story of SafeRoad is not one of declining growth or the omnipresent crisis. On the contrary, this is a story about the ever more challenging task of unifying a locally driven company to reap the benefits of corporate synergies and reduce complexity. SafeRoad is a leading European supplier of traffic safety products and solutions with an extensive product portfolio ranging from road marking, road signs and lighting columns to road restraint systems, noise barriers and rock support in tunnels. The SafeRoad Group consists of 106 legal entities working locally in 23 countries and more than 2,600 employees. The group is a result of numerous acquisitions which have created a strong position for SafeRoad in the market, at the expense of high internal complexity. It isn’t an easy task to manage a fragmented company structure with operations in many countries and provide services to local authorities while complying with local regulations and requirements, and the group risks missing out on economies of scale in purchasing.
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his was indeed the case with SafeRoad, and therefore, in the beginning of 2011, the management decided to initiate an organisational transformation process to ensure that all entities weren’t just working with a local focus, as was the case, but became one company with a
corporate mindset to optimise the processes across countries. However, it was important to the management that the entrepreneurial spirit in the local entities stayed intact, and that they continued to optimise local operations. To solve this dilemma, an extensive project was initiated with three clear objectives: first, realisation of significant sourcing synergies across the group on a short- and long-term basis. Second, design and implementation of a new group procurement structure. Third, the use of a common procurement framework and toolbox for executing strategic procurement.
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As newly appointed CPO, I quickly realised that SafeRoad, to a high extent, was a fragmented business due to the organisational structure that consisted of many independent, legal entities working without a corporate and unified mindset. The group is
EXTRACT OF SAFEROAD’S PRODUCT PORTFOLIO
RUmble StRiPeS
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processes, but it’s quite another challenge to standardise products, consolidate purchasing practices and attain the full savings potential throughout the entire group in all 23 countries. A change of this magnitude called for a more aligned strategy and clear shared goals.
O
The SafeRoad Group consists of 106 entities working
locally in 23 countries and
more than 2,600 employees.
doing well, but the potential is even larger. Furthermore, due to EU regulation and standardisation, the market is gradually opening up for obtaining much greater economies of scale. And in addition, we’re missing out on clear synergies across countries. This is why we decided to work on creating a one-company mindset”, says Thor-Erik Lindberg, Chief Procurement Officer at SafeRoad. However, changing a strong and firmly anchored local mindset is no easy task, and SafeRoad faced a great challenge. It’s one thing to establish a central and co-ordinated group procurement structure and define efficient
Road marking
Safety barrier
ver the span of eight months, SafeRoad has worked with extracting best practices across countries and functions. By involving the top management as well as local purchasing managers and local leaders and by analysing planned purchases at key entities, SafeRoad has been able to establish a common platform for group procurement and obtain significant savings on selected product groups. “The project has already realised a number of positive effects including an aligned strategy, a new organisational design, a common language and clear processes. We have truly taken a big step towards establishing a one-company mindset, and we foresee that synergies as well as bottom-line impact will show quickly. Now, we must remember that it takes hard work to keep complexity at bay”, Thor-Erik explains, and he continues: “We’ve begun the journey towards best practice in procurement, and more importantly we’ve become capable of measuring our behaviour and ensure that we’re leveraging company best practices in the supplier market. We still have a long way to go, but we’re confident that this will have significant long-term effects for SafeRoad.”
lighting
signage
Gantry
Thor-Erik Lindberg,
Chief Procurement Officer at SafeRoad