Success Story: Establishing a Durable Trusted Partner Relationship (CS223a)
Transforming from tactical to strategic procurement to unlock value for a market leading provider of systems and services to the transportation and defense markets.
This story is for CEOs who:
- Want to establish a centralized global procurement strategy across multiple acquisitions
- Want to gain visibility to spend in order to identify and implement savings opportunities across their organization
- Don’t believe an external consulting firm can bring real benefits to their organization
- Want to improve their company’s strategic position to reduce cost, increase cash and accelerate growth
This global high technology market-leading provider of systems and services to the transportation and defense markets has grown rapidly through acquisitions over several years. However, a lack of integration and accelerated growth had created a fractured company whose procurement approach held no strategic benefits. Each separate site procured what it needed with zero centralization and a strictly tactical approach to supply chain operations. The company was dealing with over 3000 suppliers which increased the demands on an already overburdened procurement team.
Maine Pointe was brought in to provide visibility to spend and implement sustainable growth and savings throughout the organization.
Winning the battle for hearts and mindsThe decentralized model and lack of data meant leadership was operating in the dark with no visibility to how and where money was being spent. Maine Pointe’s data analytics team analyzed the company’s data and identified millions of dollars in savings across the supply chain. However, the company’s CFO had questions about our ability to deliver the savings identified while the company had multiple other projects underway. To overcome his misgivings and deliver on our promise, we developed and implemented the following tools and processes:
- Introduced multiple disruptors (new suppliers) that exposed savings and performance benefits, developed into long-term partners for critical commodities
- Installed a detailed and custom designed procurement management operating system (PMOS) that enabled a sustainable process to yield the best value to the organization for years to come
- Aligned the procurement organization with ORCI to assure the right person is in the right seat heading in the right direction
- Introduced three new subsidiary companies to the procurement process and added them to the cross-functional teams
- Designed and implemented a domestic cross-functional team that identified opportunities for improved savings via negotiation strategies
- Established the top categories for savings opportunities and focused on consolidation and supplier reduction to achieve the best value for the client while increasing product margins and reducing overall material costs
Maine Pointe’s team approached this engagement in a spirit of partnership, working closely with the client to overcome concerns and taking accountability for the success of the project. This customized approach delivered results which exceeded the client’s expectations. As a result, the client’s leadership asked Maine Pointe to continue the partnership to further reduce cost, increase cash and support their growth in the areas of procurement and global operations.
The ResultsWorking in partnership with our client, Maine Pointe’s subject matter experts took a hands-on approach which delivered the following benefits:
- Reduced global procurement spend by 10.5% over 17 major product categories
- Category savings up to 50% in some areas
- Exceeded client’s cost saving expectations
- Established a measurable, sustainable, auditable process to ensure continued savings
- Earned a “trusted partner” relationship with the client at all levels of the organization
- Delivered a 3:1 project ROI
Lessons learned for other executives
- The right consulting partner can provide a level of insight that can be difficult to achieve internally
- Organizational change begins at the top. Leadership need to “walk the talk” and personify the behaviors they want to see from cross-functional teams
- Communication is key to overcoming the mistrust that can occur when a team of consultants arrives