Innovation and Cost Reduction to Protect Market Share (CS234a)
Introducing supplier optionality at a high-performance fleet safety solutions provider.
This story is for CEOs who:
- Need to align procurement across businesses to support growth
- Are dependent on a sole incumbent electronics supplier and multiple 3PL logistics provider
- Want to explore the possibility of sourcing from low-cost countries outside of China
Our client is a PE-owned safety solutions provider with best-of-breed smart solutions into integrated safety platform for fleets of every type including school bus, transit, fire, EMS, law enforcement, work truck, truck & trailer, waste & recycling, industrial and military.
Having grown through acquisitions over a number of years, the organization had maintained an operating model which allowed business units to function independently. They now needed to develop and implement a common set of processes to increase the effectiveness of logistics and procurement, enable significant cost benefits and allow the business to absorb future acquisitions rapidly and effectively.
The PE firm invited Maine Pointe to conduct a Total Value Optimization (TVO)™ analysis to help them realize this goal.
Identifying and driving savings in procurement and logisticsFollowing our analysis, leadership asked Maine Pointe to focus on a procurement and logistics within a specific category of its electronics division. They asked us to bid products in the market place and get a recommended solution, an exercise they did not have the manpower or experience to execute themselves.
To begin with, the engagement focused on sorting and aggregating data to give the company the visibility it required to find and drive savings. This gave them the ability to test the market in a way they had not previously attempted. Once this stage was completed, we deployed Maine Pointe’s six-step strategic sourcing process to create aggressive sourcing strategies and charters to leverage the entire spend for electronics, logistics, and maintenance repair & operations. Specifically, Maine Pointe:
- Aggregated data from several sources successfully delivering information which did not exist in the past
- Launched sourcing events for electronics, logistics and selected MRO categories
- Successfully searched the electronic supply base worldwide to discover new competitive suppliers offering improved technologies
- Led the development of a component approval process resulting in the client creating functional methodologies for product approval
- Worked side by side with the client and Maine Pointe’s China personnel to negotiate and source new electronic suppliers who offered technological innovation
- Introduced a logistics management operating system (LMOS)
- Effectively sourced the logistics market to one 3PL provider resulting in improved managed less than truckload (LTL) program, improved metric reporting, and expanded lower transportation costs
- Improved LTL reporting capabilities and monitoring streamlined communications to improve delivery performance and minimize damage to product
The business has now identified new suppliers for 100% of electronics and 90% of LTL freight providers. The client is well-positioned to evolve with its market and, with the advantage of a component approval process and improved communication and reporting from carriers, to ensure high quality and delivery standards.
The ResultsMaine Pointe worked closely with the client’s team in the US, and suppliers in low-cost locations to deliver the following measurable results:
- Delivered average annualized benefits of 16%, with electronics achieving up to 40%
- Selected new suppliers for 100% of electronics and 90% of less than truckload (LTL) shipping
- Introduced new technologies through alternative suppliers
- Implemented a logistics management operating system (LMOS)
- Improved LTL reporting capabilities and monitoring
- Streamlined communications to improve delivery performance and minimize damage to product
- Delivered a 3:1 ROI
Lessons learned for other executives
- Even in a high-performing organization there may still be significant savings opportunities
- Moving production out of China in the wake of tariffs may not always be the most cost-effective option
- Well-managed data is critical to any digital supply chain transformation project