Global Procurement – Strategic Sourcing & Organization Transformation for a Manufacturing Company
A large, American manufacturing company engaged Carnrite to implement a global program to re-align a fragmented tactical purchasing organization. The company’s prior approach to procurement was wholly decentralized, resulting in significant inefficiencies and redundancies as the company continued to grow in scale and complexity. Furthermore, the company had recently cemented a strategic shift from a manufacturer to distributor and marketer of parts, thereby further causing procurement challenges in an antiquated system.
Carnrite 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 thereof. Carnrite performed a thorough analysis of current-state strategy and organization structure; including conducting 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 this approach.
Key Results & Outcomes
- Transformed the client’s global procurement organization into a best-in-class structure capable of engaging the vast supplier community to identify and secure value transactions
- Elevated 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
Carnrite’s Unique Value Contribution
Carnrite’s inclusion in this engagement created significant value for the client. As a transitioning entity that needed a complete rework of procurement strategy and organization, the client benefitted from Carnrite’s 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.
A critical component in the client’s transformation from manufacturer to distributor/marketer was the ability to manage a new series of data and procedures. Carnrite’s expertise in process definition, data management, and key decision-making enabled the client to realize considerable cost savings (21% reduction in materials spending, year over year) and shift into the top of the competitor class. The client generated a 10.4X overall return on investment from engaging Carnrite.