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Success Story: Procurement, logistics, S&OP and data analysis (CS250a)


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Overcoming resource constraints to drive supply chain improvements in a low margin/rising commodity market

 

This story is for executives who:

  • Are facing increasing challenges maintaining and improving EBITDA in a low margin/rising commodity market

  • Have a tactical procurement function with poor demand forecasting

  • Operate in functional silos which are reliant on tribal knowledge
  1.  

The Challenge

This world-leading manufacturer of tire and wheel systems was facing challenges in increasing and maintaining EBITDA and margin to compete in a modern marketplace.

Supply chain functions were relatively immature and siloed with little cross-communication and a heavy reliance on ‘tribal knowledge’ for decision making. The business lacked trust in the data provided by a recently installed ERP system. The business depended on a small number of long-term suppliers and had not conducted a detailed market comparison. As a result, with commodity costs increasing and only limited demand forecasting, buying became reactive rather than proactive to contain costs.

Executives wanted to accelerate and optimize supply chain initiatives, but were concerned the business lacked the resources for such an undertaking. Maine Pointe’s experienced SMEs led by example to overcome this hesitancy working side-by-side with the client’s teams to provide leadership and transfer knowledge on a day-to-day basis. This level of expertise and practical experience gave the client the confidence to move forward with the engagement.

 

Delivering measurable results in a resource constrained business

Gaining buy-in from the top was crucial to the success of this engagement. With their initial concerns put to rest, executive leadership played a vital role in bringing their workforce on board with Maine Pointe’s involvement and driving change across the business.

Delivering both offsite and onsite, Maine Pointe’s leaders and specialists in procurement, logistics, S&OP and data analytics worked closely with the client’s team to build confidence in data and processes. To achieve this, we:

  • Used the company’s legacy technology investment to improve data accuracy, control, visibility and reliability across the business
  • Deployed this data to help break down the cost of processing, understand value adds at a granular level and improve demand forecasting
  • Incorporated our six-step strategic sourcing process with market information to establish competitive sourcing for steel, logistics and MRO/indirect categories
  • Worked with suppliers as partners to leverage opportunities to achieve positive benefits in a rising commodity market
  • Challenged and, where appropriate, replaced incumbent suppliers with alternative qualified suppliers for some materials
  • Achieved savings through better partnerships and negotiations with known or existing suppliers
  • Designed and installed a S&OP processes throughout the organization, helping leadership understand the financial impact of breaking down silos to achieve company goals
  • Implemented a demand planning process, key performance and economic market indicators, and economic production quantity tools to improve efficiency and effectiveness
  • Transferred critical knowledge to upskill cross-functional teams to ensure process sustainability and continuous process improvement in future activities
  • Developed an annual strategic sourcing plan for cross-functional teams to follow going forward

Equipped with reliable metrics, processes and the ability to recognize and predict market conditions, the client now has the buy-in at all levels of the organization to drive further supply chain and operations improvements and continue to increase the maturity of its cross-functional teams.

The Results

In a resource constrained environment, Maine Pointe helped our client achieve the following results:

  • Saved 15% in procurement of logistics (TL and LTL), 7% in steel (in a rising market), and 19% in MRO/indirect
  • Developed reliable data and improved demand forecasting
  • Implemented S&OP processes for continued planning and manufacturing efficiencies
  • Developed an annual sourcing plan for cross-functional teams to follow for future benefits
  • Challenged and, where appropriate, replaced incumbent suppliers with alternative qualified suppliers for some materials
  • Achieved a 4:1 engagement ROI
  • Improved EBITDA by 11%

Lessons learned for other executives

  • Even if your people believe there are no additional benefits to achieve, you need to test the assumption; bringing in the right partner with the right process can yield rapid results

  • You can gain control of immature/inaccurate data, technology and processes and rapidly gain control to create leverage and drive measurable improvement

  • Sometimes you need to upscale your people and processes to take your business to the next level

Talk to us.

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