Diageo targets £60m supply chain savings

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Drinks group Diageo has set out plans to refocus its global supply and procurement operations with the aim of saving some £60m a year.

Responsibility for local operations will be transferred to the markets and regional structures will be reduced. The global supply organisation will continue to be responsible for ensuring excellence across all operations.

Costs associated with the restructuring are estimated to be some £100 million.

Diageo’s brands include Guinness, Johnnie Walker and Smirnoff. The group said the changes followed the reshaping of the in-market organisations through the implementation of a 2011 operating model review and is a consequence of Diageo’s increasing presence in new faster growth markets.

“Further work will be required to establish the exact nature of the reorganisation to be made. However an initial review has already established that efficiency-driven cost savings can be delivered which together with savings from footprint changes and cost reductions in respect of the regional supply organisations are expected to amount to approximately £60 million per annum. These savings are expected to be achieved in 3 years.”

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