Marcos Vazquez, Head of Procurement at Sika, reveals how great teamwork has secured extensive procurement synergies.
The first weeks after the closing of the acquisition were very intense for the Procurement team. Procurement was the main area for quick wins and time was of the essence to start generating the first savings after the acquisition. Our main priority was to start working together with the Parex procurement team in a coordinated manner on the synergy realization plan, which included the verification of the consolidated spend data, the development of action plans to harmonize our raw materials, and the preparation of negotiations with all key vendors.
Following day one, we quickly combined Sika and Parex procurement teams at global, regional, and country levels, and started working on these plans for each country and vendor. In a very short timescale, we were able to develop a great team atmosphere, with very experienced and professional team members sharing expertise and best practice and being fully committed to achieving our ambitious procurement synergy targets.
Thanks to this great teamwork, we are proud to announce that we have significant price reductions that will result in savings of more than CHF 14 million on an annualized basis. Moreover, we have completed the integration of procurement teams in all countries, and we are continuing to work on additional savings initiatives that will generate additional value on top of what we have achieved during our 12-month integration journey.
Price reductions from corporate suppliers were leveraged to achieve better pricing for local paper bag suppliers. Parex and Sika local and regional procurement teams negotiated better conditions with local suppliers for a total annual consumption of approximately 50 million pieces. New conditions have been valid since October 2019.
Aluminate Cement was renegogiated for the whole Sika Group. Global consumption has been leveraged to achieve significant price reductions in all regions. Sika's Global Materials Group Manager renegotiated the combined Sika-Parex volumes with the support of local procurement teams. Higher volumes and common growth potential enabled better prices. Newly agreed prices have been effective since October 2019.
Silica Fume has been renegotiated in EMEA. Bundled volumes of Sika and Parex were used to achieve better conditions, including in non-Parex countries. New prices have been implemented since March 2020.