Global Procurement & Strategic Sourcing for Manufacturer
A large, American manufacturing company engaged us to implement a global program to re-align a fragmented and tactical purchasing organization. The company’s prior approach to procurement was wholly decentralized, resulting in significant inefficiencies and redundancies as the company grew in scale and complexity. Furthermore, the company made a strategic shift from “manufacturer” to “distributor and marketer”, which exacerbated challenges with an antiquated procurement system.
Approach
Our consultants partnered with client teams to implement a strategic sourcing methodology focused on commodity management. Included in this methodology were both procurement strategy and an organizational restructuring to meet the requirements of the strategy. We performed a thorough analysis of the prior strategy and organization structure, including interviews with key personnel, reviewing spending data, and identifying gaps and overlaps in current processes and roles. Savings targets, strategic initiatives, and an implementation plan were the primary outputs of our assessment.
Key Results & Outcomes
We transformed the client’s global procurement organization:
- Created a best-in-class group capable of engaging its vast supplier community to identify and secure value transactions
- Elevated the client among competitors through a strategy that enabled previously inaccessible strategic partnerships to drive strong top-line growth and performance
- Refocused client approach from a horizontal to a vertical strategy, providing the company with competitive bids and cost savings across multiple product lines
- Created supplier collaboration councils to provide transparency in marketplace, thereby improving cost, quality, and operational efficiency metrics
The company benefited from our focus on relevant, decision-driving metrics that can be shared across the organization. Communication was a major focus of the project, allowing distinct business units to synthesize results for management. As a result of the project, the client realized considerable cost savings (21% reduction in materials spending, year over year) and moved into the top quartile of the competitor class. The client generated a 10.4X overall return on investment from engaging Carnrite.