Compass Group’s change of direction

As you’d imagine from an organisation that spends £23m a year on equipment in the UK, Compass Group has some pretty strong opinions on the topic of commercial kitchen kit.

So when the company’s group managing director for the UK and Ireland, Ian Sarson, was recently invited to address senior managers from the catering equipment sector’s most influential brands, it was always going to be a compelling affair.

Sarson offered attendees at the recent CESA annual conference a fascinating insight into the evolving internal buying strategy of the Compass Group and outlined a series of challenges that he wants equipment manufacturers to help him solve.

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In the UK, Compass generates almost £2 billion a year from providing food and support services to a variety of market sectors, including business and industry, defence, healthcare, education and sports and leisure.

And there is one factor that binds all those industries together whenever Compass purchases or hires equipment: health and safety. “At Compass we are obsessed about health and safety,” Sarson told delegates. “It is the first item on every agenda of every meeting that we have, and we still have too many accidents that are related to equipment malfunction or equipment misfinishing or our people not using it properly and that is not good enough for me and it is not good enough for you guys. We need to work together to make sure that our operators are in a safe condition all of the time.”

Outside of health and safety, speed and convenience of service rank next on the priority list. The ergonomic consideration of operating is also shaping the way that contract caterers think in these times and Compass is no different, relying on processes such as Lean and Six Sigma to improve productivity, efficiency and safety.

“Anything that you have got that is labour-save or complexity-reducing — we are certainly interested in yield enhancement. 40% of my expenditure today is on food product and 30% of that is possibly destroyed in the processing. If we can get that down to 10% then all of us can do the math,” Sarson told listeners.

Calling for a more holistic view of the balance between capital and running costs — especially as Compass increasingly gains responsibility for managing its clients’ utilities activities — Sarson pledged to “look at the cost benefit of utilising better running equipment that is lower cost over the life, anywhere where that is the case.”

But he stressed that suppliers need to comprehend the realities of the contracts it manages: “If you have got a brilliant piece of equipment that I can only capitalise over 15 years because it is so well-made and I have got a four-year contract, I am going to buy something else. So we really need to make sure that we work together to put the right life-cycle and the right life duration into some of these products.”

He appealed for a greater understanding of the fact that equipment needs to be affordable over the length of the contract, which he said was “not always the case”, adding: “I don’t think we are doing particularly well at that — I don’t think we have really discussed that together as an industry recently.”

Sarson also took time to turn the spotlight back on Compass and give a candid assessment of his own business, acknowledging the company had gained a reputation for putting cost first in recent years.

“That era is over as far as I am concerned,” he declared. “We are looking at value. Now that is easy for me to say and it is easy for you guys to go ‘it’s easy for you to say’, but I genuinely mean this, and we have got an event next week where 250 of our leading suppliers are coming to see us tell the industry that we are much more interested in managing the value of our supply chain rather than the cost. So, we will not be looking for the cheapest price, we will be looking at the best value for our consumers and our clients. I recognise that is not the Compass that everybody will recognise but we really are changing the way we work,” he said.

Compass’ supply chain is now being measured on a different basis as a result of the shift in strategy, continued Sarson.

“In the past, our buyers and supply chain managers were incentivised on how much they saved from the cost base,” he said. “That is a ludicrous way of managing your cost base. It is now going to be how much business benefit they generate for our organisation. That will drive different behaviours.”

Equipment suppliers dealing with Compass will undoubtedly be keen to see just how quickly the new approach manifests itself in the organisation and whether value really will count for more than cost when the heat is on.

Compass in numbers

– Operates in 50 countries, making around £15 billion in sales a year.

– The UK currently represents approximately 12% of sales.

– 11th largest private employer in the world with 430,000 staff.

– Employs 62,000 people in the UK across 8,000 sites.

– Stock price has outperformed FTSE by 200% in last six years.

– Serves more than four billion meals every year.

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