Upgrading Procurement, Reducing Risk, and Capturing Long-Term Savings (CS270)
After being carved out from a larger organization, a global provider of clean alternatives for
manufacturing and refining processes found itself with a weak procurement team and little
visibility into its supply chain.
In part because of inexperience, the company had a lot of sole-source supplier relationships, which left it at risk of being unable to meet customer needs. In this case, those suppliers had also become the font of all legacy knowledge about the supply chain for the company’s custom fabrications.
The suppliers were increasingly frustrated by last minute changes from engineering. These factors combined to hamper the company’s efforts to drive savings and threatened any attempt to deliver on schedule. SGS Maine Pointe was brought in to develop a more mature procurement organization and shore up the company’s end-to-end supply chain.
- Control Risks & Costs: By seeking alternative suppliers on-shore, in-shore, and near-shore, we mitigated the risk of sole sourcing. Competition and optionality have driven prices down.
- Increase C-suite Control: Better visibility into operations and potential bottlenecks gave the C-suite a firmer basis on which to make their decisions.
- Provide a Single Source of Truth: We retooled the SIOP process with real-time data, a strong underpinning of KPIs, a new managerial dashboard, and more consistent compliance and tracking.
- Reduce Firefighting: By creating a clear distinction between planning and execution, we salvaged supplier relationships and ensured deadlines were met.
- $4.8 million ROI in year one.
- $9.35 million EBITDA savings in year one.
- 19 new suppliers.
This company, which drove sustainability and carbon neutrality in manufacturing and refining industries, is now able to drive sustainable
change in its own business practices.
A more mature procurement organization is able to leverage key suppliers to improve the company’s negotiating position. With procurement gaining a seat at the decision making table and with an improved SIOP process, the right people now attend the right meetings, using the right information and the C-suite has better insight and control over the
end-to-end supply chain.
The CEO knew there was a lot of value out there and SGS Maine Pointe gave them the tools to capture those savings.