From Waste to Value: How ABB Spain Earned €750,000 Annually with ERA Group

Global Technology, Local Challenges

From satellites orbiting Earth to power stations at the bottom of the sea, ABB’s technologies permeate almost every facet of modern industry. Asea Brown Boveri (ABB), the Swiss-Swedish leader in electrical engineering and industrial automation, headquartered in Zurich, operates in over 100 countries, employs more than 135,000 people, and generates annual revenues of €36 billion.

In Spain and Portugal, ABB is recognised for its centres of excellence and pioneering projects, driving innovation in robotics, electrification, and automation. Yet, even world-class engineering companies encounter challenges concerning costs that are not central to their core operations.

“We were doing very well with direct costs, but we were forgetting about the indirect costs. And when you add them up across multiple sites, they amount to a very big sum.” — Rafael Suñé, former CPO, ABB Spain and Portugal

This realisation opened the door for ABB to explore how ERA Group could help.

The Challenge: Complexity in Indirect Costs

Indirect costs – such as cleaning, office supplies, landscaping, and waste management – may not propel product innovation, but they directly impact profitability. At ABB Spain, five factories and up to 25 cost centres were managing procurement autonomously.

The outcome was fragmentation:

• Multiple suppliers (10–15 in certain categories).
• Duplication of effort across sites.
• No consolidated strategy for overheads.

Adding to the complexity were compliance requirements. Spanish legislation (LISMI - LGD) mandates that companies of ABB’s scale demonstrate active inclusion of disabled workers – either via direct employment, collaboration with Special Employment Centres, or contributions to charitable foundations. Furthermore, ABB required suppliers to adhere to the company’s stringent global Supplier Qualification System.

The challenge was unequivocal: to simplify and consolidate indirect costs, generate savings, and fulfil social responsibility obligations – all without impeding daily operations.

Translating Insight into Action

ERA Group’s approach was to blend specialist expertise with practical, on-the-ground engagement.

The project commenced with a comprehensive audit of the four categories:

• Cleaning
• Office supplies
• Landscape services
• Waste management (hazardous, non-hazardous, and metallic/scrap)

Luis Ybarra, expert at ERA Group, appointed a dedicated group of experts. Each worked side-by-side with ABB’s designated contacts, while coordinating with factory managers across Spain.

The process encompassed:

• Benchmarking existing contracts against market data to identify instances of overpricing.
• Consolidating suppliers to reduce their number from up to 15 providers in certain categories to merely 1–2.
• Embedding CSR requirements into supplier negotiations, thereby ensuring ABB satisfied both its Supplier Qualification standards and LISMI/LGD obligations.
• Maximising scrap value: rather than solely focusing on cost reduction, ERA enhanced the revenue ABB generated from the sale of metallic waste – thereby increasing returns by 24%.

Effective communication was paramount. Analysts visited factories, engaged directly with stakeholders, and ensured minimal disruption. Initial scepticism swiftly transitioned into confidence.

“When we started, some employees were reluctant to share information. But once ERA consultants spoke personally to each team, everything became more positive.” — Rafael Suñé, former CPO, ABB Spain and Portugal

The collaboration yielded annual savings of €750,000, equating to up to 25% across the four categories.

Analysis of outcomes:

• Cleaning: 32% savings
• Office supplies: 38% savings
• Landscape services: 28% savings
• Waste: 22% savings (plus 24% increased revenue from scrap sales)

Beyond the quantitative metrics, ABB achieved:

• A streamlined supplier base, mitigating administrative overhead.
• Enhanced alignment with CSR obligations.
• A more engaged procurement team, galvanised by the tangible impact of collaborative endeavours.

Insights for Business Leaders

The ABB Spain project illustrates that even organisations with exemplary direct cost procurement can leave substantial value unexploited within indirect categories.

Leveraging ERA’s category specialists, ABB not only realised financial efficiencies but also established processes that diminished complexity and reinforced compliance.

Conclusion: From Fragmentation to Strategic Focus

What commenced as a fragmented approach across five factories and 25 cost centres evolved into a unified strategy that delivered annual savings of three-quarters of a million euros for ABB Spain.

By capitalising on ERA’s insights, ABB was able to:

• Mitigate supplier fragmentation.
• Unlock hidden savings within overlooked categories.
• Ensure compliance with both corporate and national requirements.
• Motivate its teams through visible, shared success.

For business leaders, the message is clear: indirect costs are significant. When managed strategically, they can deliver savings, streamline operations, and reinforce corporate values.

“The key to success resides in the professionalism of ERA Group. They are experts, people who know well each of the materials that we have set to work. Therefore, it was actually quite simple. When you rely on an expert for each account, it is easy to reach to objectives that you have set.” — Rafael Suñé, CPO, ABB Spain

ERA identifies savings in unexpected areas, transforming complexity into capital for growth.