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Cadbury streamlines IT procurement to help fend off Kraft

Cadbury has revealed plans to slim down its £70m annual spending on IT support as it steps up its fight against a hostile takeover bid from US food group Kraft.

Roger Carr, Cadbury's chairman, slammed the takeover bid as a blatant and opportunistic attempt, branding Kraft's approach contemptuous to shareholders

"There is no strategic, managerial, operational or financial merit in combining with Kraft - indeed, we consider the reverse is true," he said.

In a briefing to analysts, Cadbury disclosed plans to cut its procurement costs, including IT purchases, by creating a global organisation that could benefit from economies of scale.

"We have identified that roughly two-thirds of our spend does not deliver the full benefits of effective procurement," said Andrew Bonfield, Cadbury's chief financial officer.

The company, a big SAP user, spends nearly £70m on IT support with global players, but it is negotiated at a local level, he said.

"We are renewing our focus on building a world-class global procurement function that will consolidate and deliver quick wins," Bonfield said.

Continuous improvement will become an important theme, Cadbury said.

The company ran in to difficulties with its SAP project three and half years ago, when IT problems contributed to a £12m deficit in profits.

Cadbury experienced manufacturing and supply chain issues, following the implantation of its £200m Probe IT programme to realise the benefits of SAP.

US confectioner Hershey, also a big SAP user, and Italy's Ferrero are considering making offers for Cadbury.


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