Procurement advisory & operating model redesign for a fuel retail network

Project overview

About the client

Our client is a large fuel retail operator in Europe & Middle East with a distributed network of gas stations and related retail infrastructure.

Its procurement function manages both capital expenditures — including station equipment, construction, and infrastructure and operational purchases, such as consumables, marketing, maintenance, and services.

As the network expanded, procurement had to manage an increasingly diverse mix of complex, first-time purchases alongside high-volume recurring spend.

Challenge

The procurement organization was using a single operating model for two very different types of purchasing: routine, catalog-based purchases and complex, non-standard sourcing requiring technical specifications and supplier evaluation.

The diagnostic identified several structural gaps that limited competition, slowed purchasing, and made accountability difficult.

This led to several issues:

• No standardized technical specification templates for new or complex categories, slowing purchases of equipment, construction, and workwear
• Competitive bids were primarily conducted through closed, invitation-only processes, limiting the supplier pool
• Single-round bidding without reverse auctions reduced opportunities to increase price competition
• A standard 90-day planning lead time was applied across categories, creating unnecessary urgent purchasing requests
• A low approval threshold pushed too many low-value purchasing decisions to senior procurement governance bodies
• Budgets were tracked primarily by quantities rather than spend value, limiting financial visibility for category owners
• No consistent KPI or incentive system for procurement employees

Key objectives

The transformation focused on:

• Building category expertise and standardized technical specifications
• Expanding the qualified supplier base
• Introducing more competitive sourcing mechanisms, including reverse auctions
• Matching approval authority to purchase value and complexity
• Creating clear accountability across the purchasing process
• Establishing a KPI-driven procurement performance model

Our procurement consulting approach

We conducted a full procurement diagnostic covering both capital and operational purchasing, mapped the current-state processes, and designed a future-state operating model.

Procurement diagnostic

Reviewed procurement processes, tender documentation, technical specifications, and category-level practices through interviews and process analysis. The diagnostic identified the main organizational, process, governance, and sourcing gaps.

Two-track operating model

Designed two specialized procurement streams: Standard Purchasing — recurring, catalog-based, and well-defined purchases & Non-Standard Purchasing — new, complex, or technically specialized requirements. This allowed each team to develop the appropriate category expertise and sourcing approach rather than applying the same process to every purchase.

Process redesign

Created a RACI responsibility matrix covering the full purchasing lifecycle, from requisition and technical specification development through sourcing, approval, and contracting. Each step was assigned to a clearly defined role.

Tiered procurement governance

Replaced a single approval threshold with a graduated authority model based on purchase value and complexity. The model established progressively higher approval requirements across functional leadership, cross-functional review, and the Tender Committee.

Competitive sourcing strategy

Recommended moving from closed, invitation-only bidding toward a broader qualified supplier accreditation model, allowing eligible suppliers to register for relevant categories. For standardized categories, the model also introduced online reverse auctions to increase price competition.

Performance management

Developed a procurement KPI and incentive framework linking employee and management performance to measurable outcomes. The model included performance-based bonuses of up to 25% of base salary. A systems integration roadmap was also developed to support future procurement automation.

Deliverables

• Current-state procurement process maps
• Future-state target operating model with two specialized purchasing units
• RACI responsibility matrix
• Tiered approval and authority matrix
• Procurement KPI and incentive framework
• Competitive sourcing strategy
• Supplier accreditation model
• Systems integration roadmap

Results

A two-track procurement operating model

Standard and Non-Standard Purchasing replaced a single undifferentiated procurement team, giving each purchasing stream clear ownership and processes.

An open supplier sourcing model

A public supplier accreditation process replaced invitation-only sourcing, creating a broader pool of qualified vendors.

Clear accountability across the purchasing process

A documented RACI matrix defined who owns each stage of requisitioning, specification development, sourcing, approval, and contracting.

Tiered procurement governance

Graduated approval authority replaced a single flat threshold, allowing low-value purchases to move faster while maintaining stronger controls over strategic and high-value spend.

Performance-linked procurement incentives

Procurement employees and managers received defined KPIs, with bonus compensation of up to 25% of base salary linked to performance.

Procurement employees and managers received defined KPIs, with bonus compensation of up to 25% of base salary linked to performance.

Business impact

Separating standard purchasing from complex sourcing allowed the procurement organization to develop deeper category expertise and apply the right level of process and governance to each type of purchase.

Expanding the qualified supplier pool and introducing reverse auctions created stronger competitive pressure, particularly for standardized categories.

At the same time, the new RACI matrix and tiered approval structure gave leadership a clearer and more auditable view of who is responsible for each purchasing decision and when additional oversight is required.

The result of procurement strategy consulting was a procurement operating model designed to support a growing, distributed fuel retail network — combining specialized category ownership, competitive sourcing, clear governance, and a foundation for digital procurement automation.