This story is for CEOs who
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Need to close a major competitive gap because of a higher COGS
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Seek top line growth and synergy savings after a merger
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Need to assess financial opportunities and the initiatives required to meet them
The Challenges
When a global specialty chemical company merged with a textile business, they knew that cross-continent integration would be difficult. The merger created a company with over 30,000 employees in 35 countries, with 25 production sites.
The newly joined companies lacked common procurement processes, KPIs, goals, and spend categories. The immature procurement department struggled to identify savings and negotiate with suppliers, yet resisted change. Their new leaders lacked “ownership” for the various categories of spend and were unfamiliar with legacy procurement issues.
Faced with all these challenges, the company sought help to reach its goals: top line growth of $2B to $2.7B and $170M in synergy savings.
Reducing addressable spend, increasing visibility of spend, and realigning the culture
To reach the maximum top line growth that the company requested ($2.7B) and exceed their maximum goal for procurement and logistics savings, SGS Maine Pointe:
- Redesigned client spend cube and revised spend categories to create global/regional consistency
- Designed and delivered custom training for global workforce to significantly raise methodology and upskill procurement
- Instituted strategic procurement, including the FLOSS (forecast, line-of-sight, submitted, signed off) process
Lessons learned for other executives
- A successful integration requires re-alignment and collaboration between all functions
- The right type of training, delivered by boots-on-the ground experts, sticks
- Once everyone in the organization knows what to look for, savings opportunities not only appear but are captured long term
The Results
- Addressed 72% of spend to reduce COGS
- Achieved $57M savings
- New management operating system (MOS) process for all workstreams
- Reduced supply chain risk with 36 new competitive suppliers
- Leveraged volume to further reduce costs
- Closed identified competitive gap, often by double digits
- Ensured sustainable change through hands-on global training and coaching
Maximizing procurement value creation after two very different companies merge
