The challenge

A world-leading food processing and distribution company was buying 80–90% of its products through import brokers. Management had little front-end visibility and limited knowledge of supplier costs and capabilities. In addition, they did not fully understand how value and costs accrued throughout their supply chain.

Under pressure from competitors, they contacted Maine Pointe for help. The challenge? To achieve savings on direct raw material spend through supply chain disintermediation and transform the way they understand global movements in their value chain.

This story is for executives in the global market who:

1. Have concerns about highlighting the value and improving the visibility of their front-end value stream
2. Want to reduce the power held by intermediaries in the supply chain relationship
3. Want greater control of the quality of the globally-sourced goods that arrive in their ports

The results

The direct procurement model which Maine Pointe implemented made it possible for our client to take control of both the cost and the quality of their product, resulting in:

• 50% of required volumes switched to direct sourcing from low-cost countries
• 27% saving in delivered cost of quality product
• Virtual elimination of non-conforming product arriving at plant
• Significant reduction in dependency on importers from the value chain
• Increased visibility and speed of reaction to changing market supply and demand profiles

Lessons learned for other executives

• You can drive down your direct costs through supply chain disintermediation
• It is possible to redistribute your value chain so that it favors you
• You can mitigate the risk to your business from outside influences by developing a wider global portfolio of direct supplier relationships