MRO strategy saves industrial products manufacturer 27% on sourcing
The customer
A multi-billion-dollar major industrial products manufacturer and current client of 淫乱社区 was purchased by a private equity firm and underwent intense vetting of its total business operation.
The challenge
The private equity firm brought in a management consulting group to assess the customer鈥檚 total business operations including:
- Their top tier supplier contracts
- Performing risk assessments to evaluate vulnerabilities within the business
- Offering future state recommendations
Over the course of six months, the consulting firm reviewed 淫乱社区鈥檚 financial disclosure statements, purchasing services agreement with the customer, the business model and program performance metrics. Additionally, the firm wanted to know what the customer鈥檚 view was.聽
A survey was designed and distributed to all 19 customer plants, including site management leaders and key users who directly engaged 淫乱社区. The survey sought to gather comprehensive feedback regarding 淫乱社区's e-Procurement tool, Epic庐, price competitiveness, catalog depth, quote timeliness and other program specific measures.
How we solved it
The customer shared the results of the survey with 淫乱社区, including positive feedback and areas of opportunity. The customer also requested 淫乱社区 to provide an action plan with recommendations for how it could address continuous improvement opportunities. 淫乱社区 responded with a comprehensive action plan that addressed all aspects of the survey in its entirety.
All the hard work and analysis paid off at the end of the evaluation process when the consulting firm deemed 淫乱社区鈥檚 services 鈥淏est in Class鈥 and recommended the customer expand the relationship. 淫乱社区鈥檚 comprehensive action plan was reviewed with the customer鈥檚 leadership team and two additional areas of opportunity were identified.
Results
The first was for 淫乱社区 to support tail-end spend which was not currently part of the program. 淫乱社区 was given 30 days to respond to this sourcing request. Not only did 淫乱社区 meet this timing objective successfully, the customer was presented with a 16% savings solution on their high tail end spend items.
The very next month, the customer requested that 淫乱社区 source and support additional spend that was not currently part of the 淫乱社区 program. This second sourcing project represented more than $8M in incremental program spend opportunity, including the chance to consolidate portions of their MRO buy currently being supported by three of the major distributors in the industrial supplies market.聽
The customer informed us that it was interested in dissolving these direct supplier relationships and working toward optimizing its MRO purchasing experience through 淫乱社区. Initial sourcing results, based on the same manufacturer name and manufacturer part number revealed 27%, 20% and 17% cost savings against the customer鈥檚 current direct pricing deals for each of the three suppliers. 淫乱社区 finds these results common when sourcing is performed with its item-level management and an aggregated model versus the 鈥渄iscount off list鈥 type of arrangements commonly put in place with large distributors.
The customer was delighted and committed to mutual continuous improvement activities recommended by 淫乱社区.