$18B global manufacturer transforms procurement to increase competitiveness and fuel growth
Amid rising commodity costs, aggressive foreign competition and severely decentralized operations, the company elected to transform its indirect procurement capabilities to drive significant savings that could be used to fund growth and enhance agility. Through the transformation the client has realized hundreds of millions in recurring savings and has unified indirect procurement across a fragmented supply chain.
Company Situation
In 2006, the company faced increasing levels of foreign competition, volatile commodity prices and high labor costs related to domestic manufacturing. Executives established a company-wide cost-saving program to boost working capital and fuel future growth. They quickly identified indirect spending as a source of untapped savings. But, given the complexity of indirect spending and their fragmented organization and processes, they would need a solution that would allow them to better manage and harmonize all indirect procurement across their autonomous business units. This would require deep expertise across dozens of sub-categories. The executives were also adamant that savings be implemented, traceable and able to be taken to the bottom line.
The Solution
The company chose ProcurianSM based on our proven ability to help companies transform indirect procurement and deliver maximum realized savings. By partnering with us, the client gained access to our Specialized Procurement Infrastructure™, which infuses teams of dedicated category experts, real-time market intelligence and proprietary technology into a comprehensive spend management process. Procurian was specifically engaged to:
- Help Procurement optimize and fully manage approximately $1B in spend in categories including MRO, marketing, corporate services, logistics, direct materials, and retail support
- Support an integrated set of activities, including Category Planning, Sourcing, Implementation, Contracting, Transaction Management, Supplier Relationship Management, Continuous Cost Innovation, and Information Management and Reporting
- Leverage the client’s existing SAP platform while bringing proprietary sourcing, category management, workflow and analysis tools – Radix™ and SavingsLink™
Results Realized
By leveraging Procurian’s Specialized Procurement Infrastructure, the company has been able to achieve hundreds in millions in realized savings while also:
- Reducing end-to-end cycle time and transactional costs while driving continuous improvements that resulted in a 90% increase in compliance, a 213% increase in transactional savings and a 50% reduction in transactional lead time
- Achieving 15% cost savings and 24% working capital savings related to their dedicated fleet solution which included implementation of a new supplier, rightsizing of service and a new service level agreement
- Supporting highly strategic Retail Stores program that delivered $48MM EBIT and directly contributed to top-line growth
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