Procurement Transformation - Food & Beverage Manufacturer

Executive Summary: Procurement Transformation - Food & Beverage Manufacturer
Client: Mid-size food and beverage manufacturer (NSW)
Consulting Team: Hunterstone Australia
Engagement Duration: 14 weeks
Annualised Savings Delivered: AUD 290,000

PROJECT BACKGROUND & CHALLENGE

The client operated a food and beverage manufacturing facility with 52 active suppliers across ingredients, packaging, contract services and capital goods. Purchasing was managed reactively - orders placed against immediate need, no formal contracts in place for the majority of spend categories, and payment terms defaulted to 14–30 days. With input costs rising and margins under pressure, leadership engaged Hunterstone to assess and restructure their procurement function.

Key issues: fragmented supplier base with no commercial leverage, absence of formal tendering, no category management discipline, and limited spend visibility across business units.

HUNTERSTONE SCOPE & APPROACH

Hunterstone conducted a full procurement diagnostic before designing and executing a structured improvement programme covering: spend analysis and category mapping across all external expenditure; supplier rationalisation to consolidate volume and improve leverage; formal RFx processes across six high-spend categories (ingredients, packaging, contract manufacturing, logistics, utilities and indirect goods); payment terms renegotiation across the retained supplier base; and implementation of a practical procurement governance framework.

OUTCOMES & COMMERCIAL IMPACTS

Supplier base: rationalised from 52 to 29 active suppliers, concentrating volume and improving commercial leverage.

Cost reduction: 17% aggregate reduction on addressable spend, delivering AUD 290,000 in annualised savings.

Payment terms: average creditor days extended from 22 to 51 days - materially improving working capital and reducing short-term borrowing requirements.

Contract coverage: structured supply agreements in place for 100% of strategic and high-spend supplier relationships.

Lead time variability: average lead time variance across key ingredient categories reduced by 38%, improving production planning reliability.

WHY THIS ENGAGEMENT SUCCEEDED

Clear spend visibility was established before any remediation action was taken. Supplier rationalisation was commercially disciplined, retaining capability while concentrating volume for leverage. The governance framework was designed for an SME without a dedicated procurement team - practical and sustainable. Payment term renegotiations were conducted collaboratively, preserving relationships while recovering commercial ground.

SUMMARY

Hunterstone transformed a reactive, fragmented procurement function into a structured, commercially disciplined process - delivering AUD 290,000 in annualised savings, improved working capital and a cleaner, more manageable supply base. The client now has the foundations to continue improving procurement performance independently.