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Global Procurement

NEEDS-BASED RESULTS

 

Global Procurement

SITUATION

Manufacturer of CDs and DVDs needed to achieve significant economies of scale by implementing a global, strategic Purchasing organization.

DRIVER GOAL

  • Deliver annual procurement cost savings of $50 million through reduction in purchase costs and process improvements.
  • Realign the current organization to become world class.

RESULT

  • Identified cost reductions of $93 million in annualized savings.
  • Implemented savings of over $67 million per year.
  • Improved payment terms and cash discounts to manage cash flow.
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Case Study

Establish World Class Strategic Sourcing & Global Procurement

Issue

As part of a comprehensive transformation program to improve global profitability, a manufacturer of audio cds, cd-rom, and pre-recorded audio and video cassette tapes set its sights on achieving significant economies of scale by implementing a global strategic program to realign a fragmented tactical Purchasing organization. The company faced a very challenging market with declining sales and margins, which required management to reduce costs without impairing operations. The company also had an extremely decentralized approach to procurement that was not organized strategically.

Highland Approach

A detailed analysis concluded that immediate changes were needed in business practices and operating procedures. Accordingly, the team implemented and executed on a Strategic Sourcing Program, which included a thorough review of all goods and services purchased by category and corresponding supplier. The process involved setting up a cost savings program management process, prioritizing and managing strategic sourcing programs within each major category, creating value for the organization by leveraging the spend, improving discounts and negotiating more favorable payment terms while improving service levels and lowering total cost of ownership.

The second major component of this strategy focused on organization realignment and rebuilding of the Procurement function around a Strategic Category Management focus with tightly integrated controls for managing the Site Purchasing organization.

Actions Taken

The Highland Group partnered with client teams to implement a Strategic Sourcing methodology focused around commodity management. Reaching the goals required a redefinition of skills and a new organization to manage the ongoing implementation, cultural change, and improved processes between and within the business unit, corporate support organizations and suppliers. The new processes improved communications and collaboration to achieve the following:

  • Improved spend management and metrics through the implementation of the Ariba Spend Visibility technology.
  • Established Category Management processes in conjunction with key performance indicators at the Category Management and Site Purchasing functions.
  • Established policies, procedures and metrics to manage Procurement and supplier scorecards and formal quarterly reviews for managing strategic suppliers.

Achieved savings of

$67m

by implementing World Class Procurement Practices

We could have never implemented this massive change this quickly without you!

John Barnett

Vice President, Global Procurement

Related Information

industry-based

subject matter-based

Client Partner

Financial Services, Marketing & Consumer Products

Petrina is a creative, hands-on executive with over 25 years of international business experience with a proven track record of working collaboratively across traditional boundaries and solving complex operational issues. She previously served at the senior executive level of one of North America’s leading financial institutions and several global consulting organizations. There, she led engagements serving industry-leading clients in United States, Canada, England, Germany, Austria, Switzerland, Norway and the Netherlands.

Project Leader

Sales, Marketing & Consumer Products

North America

Bill is a senior project leader with more than 20 years of hands-on experience in assisting multinational companies by deploying his expertise in Lean Six Sigma and Business Process Management tools, tactics and strategies. He has deep expertise in sales and marketing improvement, supply chain optimization, fixed-cost reduction, channel management, total production management, balanced scorecards and post-merger integration.