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Balfour Beatty UK to cut supply chain by two thirds

Balfour Beatty’s Construction Services UK division has revealed plans to cut the number of suppliers it works with from 27,000 to 10,000.

This includes asking its engineering consultants, architects and legal advisers to bid to join framework panels in order to win work from the £3.7bn turnover division.

The division’s chief executive Mike Peasland is looking to leverage efficiencies from the six UK operating companies that have been under his remit since he took on the role at the new division in July last year.

The division spends two thirds of its revenue on goods and services. “We are going to create frameworks and procure from suppliers as a division,” said Peasland.

“For consultancy we’ll create panels of engineers, architects, legal advisers etcetera for which people will have to tender. We need to have competition to keep everyone competitive.”

The process is starting with what Peasland calls “Wave One” which is rationalisation of procurement of safety equipment, stationery, printers and commodity supplies like cabling.

Consultancy services will be tackled later in the year.

The move by Balfour Beatty Construction Services UK follows a similar process already underway at Carillion.
Carillion is looking to slash its supply base from 25,000 to 5,000 firms to save £140M a year (NCE 18 November 2010).

Balfour Beatty Construction Services UK is made up of Balfour Beatty Major Civil Engineering (which includes Ground Engineering); Regional Civil Engineering (which includes Dean & Dyball and Birse); Construction (Scottish and Southern); Construction Northern; Engineering Services and Mansell.

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