Optimising our operational efficiency

 

“This programme is not just about cost savings, it is also a programme that will help us to work in a simpler, more effective way across the business.”

Karen Witts
Chief Financial Officer

Over these next five years, the key driver of Kingfisher’s operational efficiency is going to come from our work on goods for not for resale (GNFR). These are all the goods and services that we need to run our business, that are not sold to our customers, such as paper for catalogues and the fork lift trucks that are used in our stores.

Kingfisher spends £1.2 billion a year on goods not for resale, and having completed a detailed scoping exercise last year, we believe that around 90 % of this spend can be unified. This programme is not just about cost savings, it is also a programme that will help us to work in a simpler, more effective way across the business, without compromising on quality.

Our GNFR spend has been broken down into three ‘waves’ which will be implemented largely over the next three years.

Wave 1 is well progressed, including categories such as media buying, print and paper and mechanical handling equipment. The results of this wave will start to be delivered in 2016/17. Analysis has started on Wave 2, which includes point of sale material, financial services and shop-fitting.

GNFR Case study:
Print and Paper

The print and paper category includes all the promotional leaflets, catalogues and other marketing publications we produce for our customers.

It’s a category that demonstrates how we can better leverage the scale of the Company by unifying our approach to managing GNFR categories across our operating companies. In the past, each operating company has taken its own, individual approach. For example, we use promotional flyers in all our operating companies, but they have different sizes, different paper grades and different printing methods, and we have negotiated with our suppliers at different times of the year.

As part of our new approach we have worked together to harmonise our approach to this category. We are picking the optimal specifications, which means we are looking for lowest cost formats which are the most efficient for suppliers’ manufacturing process. We have also been looking at the total end-to-end costs for these publications, including paper waste, print costs and transport costs. But lower cost does not mean lowest quality. For example, by working with our suppliers we have been able to change the printing process on certain publications, driving better quality whilst reducing costs. We also have been able to consolidate volumes with fewer suppliers and thereby improving our bargaining power. And finally, we have run a joint tender process for our different operating companies enabling us to better leverage our scale and get better commercial terms.