Procurement at Sara Lee is taking a new approach to its MRO buy that's right in line with other big changes occurring at the company.

David Cotteleer, vice president of procurement and co-pack/co-manufactured, is responsible for Sara Lee's maintenance, repair and operations (MRO) purchasing. He and his team are centralizing the MRO buy and working toward getting suppliers they select through a strategic sourcing process more involved in the business. Sara Lee's annual MRO buy is $68 million, and consists of such categories of spending as:

• Cleaning/janitorial supplies and personal protective equipment
• Tools and electrical supplies
• Motors and power transmission products
• Sanitation chemicals
• Uniforms and clothing.

The benefit to Sara Lee of this new approach to MRO comes from increased purchasing leverage that will result from the consolidation. "What this transformation has allowed us to do is view ourselves as one large organization as opposed to a collection of 50 or 60 smaller operations," says Cotteleer.

Sara Lee's approach. In February 2005, Sara Lee announced that it was beginning a multiyear plan to transform itself into a company focused on its food, beverage, household and body care businesses around the world. A few months later, management hired Garry Berryman as its new chief procurement officer. Berryman's purchasing experience includes having led the supply management operation at Harley Davidson when that company received Purchasing's Medal of Excellence in 2000.

Berryman set to work to centralize procurement at Sara Lee. Until 2005, the company's brands operated independently, with each doing much of its own purchasing. Now, Berryman is bringing together the buying power of the company's food and beverage, food service and international businesses.

Soon after he arrived at Sara Lee, Berryman hired Cotteleer, who had worked with him at Harley Davidson, to lead procurement for contract manufactured products as well as transportation, facilities, MRO and capital equipment.

Cotteleer and his team are transitioning MRO purchasing at Sara Lee from strategic sourcing to category management to supplier integration. Prior to Berryman's arrival at the company, a small corporate purchasing group had negotiated some national agreements for some MRO items.

"We are absolutely in lock step not only with procurement, but also with the overall transformation of the company," says Cotteleer. "Our strategy is centered on establishing deep and mutually beneficial relationships with a core set of suppliers that have the capability to service all our locations nationally. And where we have the synergy between the North American and international operations, we will look for global opportunities."

In the supplier selection process, a team led by procurement, and made up of finance and operations representatives of each business, looks for capability to service the company's facilities nationally or globally. Suppliers selected by the teams for MRO must be recognized industry leaders in quality, service, delivery and cost, says Cotteleer. "We want suppliers that not only can deliver faster and give us a great price, but that also are capable of coming into our facilities and working with us to identify better applications for products as a way to reduce total cost."

Sara Lee's procurement operation measures supplier cost performance monthly. And, with suppliers that the purchasing professionals are working to get more involved in the company's business, they conduct quarterly business reviews which track service and quality in addition to cost performance. They also share Sara Lee's long-term business outlook with the supplier and discuss how the supplier fits into corporate strategy. Currently, procurement is doing such joint business planning mainly with the company's suppliers of direct materials, but has plans to soon include suppliers of MRO items.

In fact, Cotteleer says he and his team are finalizing a contract with a supplier for facilities supplies that includes a value (cost) improvement plan, which consists of clearly defined annual targets across the company's locations. The next step is the joint business planning process in which both Sara Lee and the supplier identify opportunities by facility, prioritize them and then execute.

"I view the overarching strategy for MRO as being no different from our approach to direct materials in that it's all about building relationships with suppliers that can deliver in terms of quality, cost, delivery and application," says Cotteleer. "We're applying the same level of diligence, the same approach to developing suppliers as we would with any critical supplier of direct materials."

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