Strategic Sourcing Project Examples

 

Business Issue: An automation company was facing constant material shortages and increasing cost of purchased materials.

Approach Used:

• Flow Consulting performed an intensive 2-day Procurement Snapshot which included interviews, personnel assessment, cost data analysis, and process reviews
• Identified the key problem areas
• Trained Engineering and Purchasing in tools to keep preliminary product development costing minimized

Results:

• Recognition of need to change purchasing leadership and with Flow Consulting support in locating and interviewing replacement leader
• 20% reduction in overall material costs for subsequent automation products
• Materials shortages were reduced by 50% within three weeks

Business Issue: The new CEO of a design-to-order higher technology company has been facing eroding margins due to intense pressure on their customers’ bottom lines. He needed a quick assessment of potential savings in his purchased materials and specific recommendations for implementation.

Approach Used: Flow Consulting began with a quick and hard hitting analysis of  the company’s total purchasing expenditures. Flow Consulting also interviewed key personnel in Engineering, Purchasing and Finance to identify process issues and their strengths and weaknesses. Clear issues in long term supplier relationships with no cost reductions and Engineering/supplier price negotiations were identified.

Results: Based on Flow’s historical expertise in working with suppliers, 10 percent cost savings were identified in future cost downs based on working with their top 15 suppliers. In addition to this, processes are being put in place to have Engineering involve Purchasing in all phases of supplier price negotiations. These steps will reduce future costs in new components by at least 20 percent. Both Engineering and Purchasing are being trained in Strategic Sourcing tactics and cost avoidance.