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Providing optionality and risk mitigation for a sole-sourced supply chain (CS284)

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This story is for CEOs who:

  1. Need better relationships with legacy suppliers as well as a more diverse supply chain
  2. Lack the processes and skills to capture longterm, sustainable savings
  3. Unsure where to find alternative suppliers to meet demand

The Challenge

This high-end provider of flatware, dinnerware, and glassware found that its legacy suppliers in China were unable to meet the reliability, speed, and quality standards they met before the pandemic, especially after unplanned factory closures. Long lead times meant the company couldn’t restock quickly enough to meet customer demand, leading to the loss of millions of retail orders

Securing the supply chain, optimizing procurement, and improving quality

SGS Maine Pointe:

  • Identified over 100 potential suppliers across the globe and then refined the list based on a clarified category strategy and improved market intelligence
  • Used strategic negotiations with key suppliers to move 35% of production to Mexico and create alignment with alternative suppliers in China and other locations
  • Negotiated supplier agreements resulting in 41% EBITDA improvement
  • Reduced freight costs by shortening over a third of the supply chain
  • Selected vendors on their ability to match should costs
  • Matured the procurement function and set up a PMOS that strengthened the company’s ability to handle future disruptions
  • Enabled company to deliver product more quickly and reliably to customers, preventing the loss of retail orders

Lessons learned for other executives

  • For long-term procurement savings, companies have to mature and upskill their procurement function
  • Optionality de-risks the supply chain and potentially reduces logistics costs
  • Clear specifications and communications help suppliers to meet quality standards

The Results

  • 41% EBITDA improvement
  • 35% increase in optionality
  • $17M annualized cost savings
  • 11:1 ROI
  • Set up a procurement management operating system (PMOS)
  • Enabled company to meet demand faster and more reliably
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Providing optionality and risk mitigation for a sole-sourced supply chain (CS284)

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