Strategic Sourcing

Driving cost savings through
Strategic Sourcing and Logistics and Supplier Management.

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Business Issue: Material Shortages

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

Approach Used by Flow Consulting:

1. Flow Consulting performed an intensive 2-day Procurement Snapshot, which included interviews, personnel assessment, cost-data analysis and process reviews
2. Flow Consulting identified several key problem areas
3. Flow Consulting trained Engineering and Purchasing employees to keep preliminary product development costs to a minimum

Results:

1. Recognition of need to change purchasing leadership and with the support of Flow Consulting, locate and interview a replacement purchasing leader
2. 20 percent reduction in overall material costs for subsequent automation products
3. Materials shortages were reduced by 50 percent within three weeks

Business Issue: Eroding Margins

The new CEO of a design-to-order higher-technology company has been facing eroding margins because of intense pressure on the bottom-lines of its customers. The new CEO needed a quick assessment of potential savings in his purchased materials and specific recommendations for implementation.

Approach Used by Flow Consulting:

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

Results:

Flow Consulting identified a 10 percent cost savings in future cost-downs based on working with the company’s 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 processes will reduce future costs in new components by at least 20 percent. Engineering and Purchasing employees are being trained in Strategic Sourcing tactics and cost avoidance.