Telkom to cut its R17bn procurement bill
Embattled telecommunications giant Telkom is eyeing significant procurement cost cuts as part of actions to return the group to sustainability.
In the 2014 financial year, Telkom spent roughly R17-billion with suppliers, chief procurement officer Ian Russell said at an investor presentation earlier this week.
It had emerged that, of Telkom’s 2 400 active suppliers, 23 suppliers had absorbed 80% of the procurement spend.
“The procurement value delivery plan is focused on taking as much as possible out of the 2014 financial year third-party cost base of R17-billion over a three-year period,” he said.
The company continued to reduce third-party spend by “managing supplier relationships better” and developing closer, more strategic partnerships with key suppliers – a critical focus for the next three years.
Other key actions to be taken by Telkom until 2017 included reinvesting in the procurement team and boosting capability to improve execution, creating a value-based culture, with a focus on demand management and specification challenges; and creating a structured transformational sourcing programme.
Further, Telkom continued the valuation of its real estate portfolio, which comprised 23-million square metres of land and 2.2-million square metres of buildings, of which 1.7-million was owned.
In total, 15 345 locations – 12 762 of which were masts or towers – formed part of the property portfolio.
A strategic end-to-end review of the portfolio would be completed in the short term after Telkom incurred more than R2-billion on property-related operating costs during the 2014 financial year.
The company would move to reduce its property-related operating costs by shedding some of its noncore property assets, consolidating its head office, reducing energy costs, implementing “workplace of the future” office standards and exploring opportunities for office space optimisation.
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