Situation Summary

Situation
• A car manufacturer
• Multiple factories and production sites in countries of presence
• Procurato was asked to conduct an Opportunity Assessment (OA) to identify improvement opportunities and potential savings for the company in particular categories across Indirect and Direct spend

Objectives
• Understand and control rapidly increasing spend across Direct and Indirect categories
• Understand key drivers of expenses and the reason why different suppliers of the same application are not used across all countries
• Gather benchmarking data to compare existing deals to the market
• Compare existing company’s deals across countries with local deals
• Standardize the processes across multiple plants to achieve stability and reduce risks
• Consolidate the suppliers
• Unlock savings opportunities as a result

Key activities

Phase I
• Understood the current processes, issues and key focus areas
• Understood how the client was buying goods and services (trends and patterns)
• Calculated the split between company’s deals and local deals made and identified the reasons behind it
• Benchmarked existing deals and found the opportunities for better deals with both new and existing suppliers

Phase II
• Negotiated contract terms with existing suppliers to achieve consolidation
• Found suppliers who could provide goods and services to more countries of client’s presence on better terms
• Investigated alternative products and services
• Introduced changes with necessary trainings to implement new approaches

Benefits achieved

Phase I
• Identified savings of €20m+
• Facilitated the work of procurement teams across countries by providing them with benchmarking data and new processes to evaluate existing and potential deals

Phase II
• Began several initiatives across all Direct spend
• Better procurement structure
• Further value delivered through reducing complexity (standardization of data and specs, supplier consolidation) and better visibility across spend
• Documented the process in order to set new sites up using the same strategy in the future

Lessons learned

• Standardization of spend is the first step to achieve full visibility across multiple countries as procurement teams can call things differently and it won’t be captured
• Interviews with category managers/buying experts are crucial to understand the business and approaches
• Make sure we factor in the Benchmarking the differences between standard of service