Global consolidation: Asahi targets US$100mn annual cost savings via new procurement arm
Although the Asahi brand is well known in the international beer sector and active in many markets worldwide, many of its procurement functions are currently handled on an individual region or country basis.
The firm believes that this structure is hindering it from achieving maximum efficiency and productivity, and has thus set up the new Asahi Global Procurement organisation based in Singapore, led by newly-minted CEO Tomas Veit.
“The key focus is currently on creating a strong and capable team to provide efficient and effective services,” he told us.
“Our newly introduced operating model will also strengthen the partnership with our key strategic suppliers across the world with new focus on initiatives that will help us to expedite sustainability and our risk management agenda globally.”
According to Asahi data, this new establishment is targeted to generate a minimum of US$100mn every year in average in procurement savings, over a five-year period starting from 2024.
‘This will be achieved via the cost savings and improved cost control effect, including the mitigation of potential future cost increases e.g. measures for cost avoidance (via methodologies based on detailed analyses and forecasts of market conditions) and leveraging value enablers (efforts to achieve optimal procurement prices through enhanced cost analysis and negotiation capabilities),” stated the firm.
Both cost avoidance and value enablers are measures that will help to curb the impacts of goods and services procured, which would be especially important during price hikes, inflationary pressures, and other similar situations.
Asahi Global Procurement will also be the firm’s first function that has a wholly global focus, which Asahi also views as a step towards more efficient and integrated management.
Asahi as a company has four regional headquarters worldwide in Japan, South East Asia, Oceania and Europe, the third party spend for all of which Asahi Global Procurement will oversee.
When fully functional, this establishment is projected to directly hold and manage over 50% of the overall Asahi Group’s total third party spend; and about 90% of this spend in conjunction with other integrated regional and local procurement teams.
“Asahi Global Procurement is the first functional organization of the Asahi Group to be integrated globally [and] we view this as an initiative to elevate our management to a new level and promote the advancement of overall management,” Asahi Group Holdings President and CEO Atsushi Katsuki added.
“We expect the consolidation of category management and sourcing functions on a global scale to not only create group synergies, but also contribute to solving various issues in the global environment and society.
“[This is all crucial to Asahi in] leading to the promotion of sustainable procurement.”
Beyond just procurement
As highlighted by Katsuki, besides its more prominent procurement role the new arm is also expected to drive sustainability targets and other non-financial values for Asahi.
“This will include strengthening collaborations with key strategic suppliers [to] deliver non-financial value [such as] promoting supplier driven innovations, mitigating procurement commodity and non-commodity risks, or addressing sustainability topics,” he said.
“Examples of these are sustainable agricultural, climate change or circular economy (with a focus on packaging materials).
“Asahi Global Procurement will also support the growth of Asahi as a whole by developing new capabilities and expertise for our global procurement-related functions and workforce.”
