Thule: Procurement Potential - Ulf Berghult

Having expanded through a series of international acquisitions, Swedish-based vehicle accessory manufacturer Thule AB needed to establish a structured procurement programme with a partner driven by value generation, as CFO Ulf Berghult explains to Nigel Ash.

‘Since 2004 we have made ten strategic acquisitions in Europe, North America and Asia,’ says Thule CFO Ulf Berghult. ‘When I joined the company in 2004 we had a turnover of $247 million. In 2008 it had grown to $752 million but the individual companies in the group were autonomous and it has been our job at headquarters to balance a portfolio of brands.’

Lean machine

The board and group management initiated the Full Potential project during the summer with the scope of exploiting potentials within the group.

‘One of the potentials that we wanted to exploit was procurement; the co-ordination of all of our purchasing. We turned to Accenture to provide us with a structured process,’ Berghult says.

‘With their help we examined the whole procurement structure. We assessed individual procurement professionals and recruited vicepresidents for each business area to be in charge of purchasing and appointed a group procurement officer reporting directly to our CEO,’ he adds.

Value propostion

With Accenture’s help, Thule has been building up a database of all purchasing agreements and quantity statistics, to better understand where the most value can be realised in its procurement programme.

Thule is currently using a longer contract on the purchasing of steel and aluminium.

It is also active in Asia with two organisations: one serving Case Logic and the other mainly serving the car rack business.

Berghult explains that, while Asian sourcing is ramped-up, the number of companies used will be kept down.

‘In the current downturn, we are looking to develop a deeper relationship with our suppliers and generate volume discounts by concentrating our purchasing with fewer companies, where we might before have had many more,’ says Berghult.

‘This goes hand in hand with long-term design upgrades that limit the number of component variations. I believe that we have an open and straightforward relationship with our main suppliers. The goal is to be better prepared, that is to understand the different cost drivers of the purchased article in order to have a better position when negotiating,’ Berghult says.

‘We are not trying to push prices right down but we are looking for a reliable, long-term win-win relationship with our suppliers, who will then invest to follow our product development and enhance our own brand equity,’ he adds.

This determined understanding of suppliers’ cost bases is being led by a newly-employed analyst who not only monitors changes in raw material prices but also the financial performance of suppliers.

This allows a constant assessment of the security of supplies and the bottom line that will be driving them in negotiations.

Third party

Thule chose Accenture as its business improvement partner in a three-way beauty contest for two reasons.

‘Price was important but the quality of service offered was paramount,’ says Berghult.

‘Accenture also scored highly because of the talent it had in Scandinavia and we have not been disappointed in our choice. The project is going well and we are very impressed with Accenture; they have provided a bright team of consultants who are highly productive.’