Case Study
$6B North American Aggregates and Heavy Building Materials Producer Centralizes Procurement, Delivers $18M in Savings, and Establishes Scalable Corporate Control for Acquisition Growth
$18M
Annualized Procurement Cost Reduction
Strategic Imperative
To deliver $10M+ in procurement savings by shifting from Division Presidents’ decentralized autonomy over business-related activities to a centralized approach, recognizing operations as the field organization’s core competency while transferring procurement responsibilities to a central support function and strengthening corporate control, oversight, and cost efficiency
Client Background
- National building materials network includes more than 500 facilities across 29 states, Canada, and The Bahamas
- Product portfolio includes aggregates, asphalt, ready-mixed concrete, and specialty materials serving construction and infrastructure markets
- Procurement scope extended across corporate functions, operating divisions, commodities, suppliers, and location-level purchasing decisions
- Newly appointed CEO pursued greater growth and competitiveness before accelerating the company’s acquisition strategy
- Leadership viewed procurement centralization as a catalyst for cultural change, corporate oversight, and scalable expansion
- Procurement costs represented a major opportunity, with leadership targeting at least $10M in annual savings
Key Issues & Barriers
- Division Presidents retained broad autonomy over business activities, leaving procurement decentralized across the operating organization
- Corporate leadership lacked centralized visibility and control over purchases, pricing, commodities, and supplier decisions
- Decentralized purchasing limited enterprise negotiating leverage and prevented consistent preferred-vendor arrangements across divisions
- Procurement roles, responsibilities, and core competencies were not clearly defined across corporate and divisional levels
- Organizational goals and measures were not consistently linked to procurement, commodity, and financial expectations
- Entrenched management culture resisted the corporate controls required to support acquisition-led growth and cost efficiency
Key Implementation Components
- Conducted executive leadership sessions to build consensus around procurement centralization, growth priorities, and cultural change
- Centralized purchasing controls and visibility, strengthened pricing negotiations, and established preferred-vendor arrangements for critical commodities and items
- Developed balanced organizational goals, metrics, and measures spanning financial, customer, quality, operational, and employee outcomes
- Linked procurement, commodity, and financial expectations from corporate procurement through division operations
- Defined position-specific roles, responsibilities, and core competencies across centralized procurement and operating interfaces
- Designed and implemented an optimization-based System for Managing to support the transition and sustain cost efficiency
Benefits & Results
$18M
Annualized Procurement Cost Reduction
16%
Unit Purchase Cost Reduction
95%
Preferred Vendor Compliance