Client situation
Worldwide, our client is a leading manufacturer of mining equipment. The overall company objective was to increase profitability, which was insufficient compared with benchmarks. End products have low volumes and high safety and quality requirements.
Procurement organization
The procurement organization was newly restructured, with people assigned to new responsibilities. The organization was structured by material categories, but product managers nevertheless held significant power. The previous procurement focus had been on reducing delivery times. The realization of savings had been disregarded. There was no valid overview of ongoing and planned procurement projects or their potential.
Our approach
- Build-up of spend cubes. Analysis of existing savings potential as well as identification of new potentials.
- Introduction of an effective structure for project organization and acceleration of project implementation.
- Further development of the organizational structure to enable effective category management.
- Design and implementation of strategic sourcing processes.
- Establishment of functional and cross-BU collaboration between procurement and R&D.
- Increase of spend in best-cost countries.
Solution and outcome
- Year 1 realized net savings of $38.4M, further $7.8M identified.
- Year 2 > 200 projects with net savings of $77.6M
- Objective was the realization of $40.7M of net savings as well as the further development of procurement to a strategic partner