Arla to put pressure on suppliers

Since setting up Global Purchasing following the MD/Arla merger, the Group has saved around 110 million euros on purchasing and a further 23 million euros worth of savings are in the pipeline.

03/06/05 During June, and in keeping with its current cost savings programme, Arla Foods will be calling upon the Group’s preferred global suppliers to help cut its purchasing budget by 5% to 7%. “Not an impossible task,” as Jørgen Skaarup, Director, Global Purchasing, puts it.

Since setting up Global Purchasing following the MD/Arla merger, the Group has saved around 110 million euros on purchasing and a further 23 million euros worth of savings are in the pipeline. The savings have been achieved through global agreements with as few as one or two suppliers within each field. So far purchasing agreements have been signed covering 66% of all purchasing areas.

In return, some suppliers will be offered better terms such as longer contract periods or sole supplier status. They will also be asked to come up with new ideas, e.g. for using thinner cardboard for packaging, fewer types of strawberry flavourings for yoghurt production or suggestions for saving water and energy.

The suppliers must come back with their savings suggestions by August/September.