Analysis
This family-owned vegetable grower, producer and shipper is the world’s largest in its category. Despite being a multibillion-dollar concern, the company has remained committed to its founding philosophy of providing good value while conducting business with integrity.
Leadership wanted to improve measurable performance and infuse procurement best practice to mitigate against future cost increases. Consequently, and for the first time in the company’s 50-year history, they decided to bring in a consulting firm.
SGS Maine Pointe was asked to focus on implementing and sustaining significant improvements in the packaging and maintenance repair and overhaul (MRO) categories, positioning our client to improve its overall competitive business performance and mature internal strategic procurement within the plant operations group.
Implementation
When SGS-Maine Pointe began our analysis, the client had no idea what to expect. Executives were anxious about alarming the workforce, especially as they had recently consolidated the business. They asked SGS-Maine Pointe to make every possible effort to mesh with their team, adjusting to the company’s culture, to allay these fears.
Our TVO analysis revealed an organization with many good procurement practices which wanted to achieve an even higher level of performance in a short period of time. Procurement was mostly tactical and lacked high maturity strategic sourcing and negotiation skill sets.
SGS Maine Pointe triangulated competitive, market and industry information to identify potential risks and opportunities which the client had not previously been aware of. We produced a spend cube and should cost models to clearly demonstrate the opportunities. These insights, combined with the hands-on experience and expertise of our SMEs and the flexibility of our approach, helped build trust between SGS-Maine Pointe and the client. This made them confident we could help drive value for their business and work comfortably with their team as we moved forward.
Working closely with the client’s team, SGS Maine Pointe:
- Deployed the 6-step strategic sourcing process and guided the cross-functional team responsible for driving implementation
- Utilized various forms of competitive supplier analysis, including multiple supplier forums, to convince incumbent suppliers to offer savings and Introduced qualified new suppliers
- Helped leadership overcome concerns about ‘speech making’ by adapting supplier forums to a Q&A format
- Launched several strategic sourcing events consisting of multiple requests for proposals and negotiations
- Prepared the negotiating teams, and sat elbow-to-elbow with the client’s teams during many strategic face-to-face negotiations with new and incumbent suppliers
- Installed a supplier relationship management system including a supplier scorecard
- Created a win-win scenario with incumbent suppliers as they now have more visibility, involvement and structure.
As procurement transformed from tactical to strategic, its maturity increased from level 2 to 3.5 on the 5-level TVO Maturity Pyramid™.
The Procurement Management Operating System (PMOS) we implemented provides management with a set of tools, procedures, policies, practices, roles, responsibilities, communications, activities and metrics which enable the organization to achieve aggressive short-term goals and objectives while sustaining and improving on performance over time.
Results
- Drove annualized benefits representing 11% of the addressable spend on packaging and MRO categories
- Overcame initial anxieties about working with a consultant and built a strong partnership with the client team
- Installed a supplier relationship management system
- Trained and mentored team members in the strategic sourcing process
- Transformed procurement from a tactical to a strategic function
- Implemented a comprehensive PMOS to ensure sustainability of engagement benefits
- Achieved a 4.3:1 ROI
Driving value in a firm that is not accustomed to consultants
