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Equipment manufacturer reduce their procurement cost by 13%
CASE STUDY

Equipment manufacturer reduce their procurement cost by 13%

By December 21, 2021No Comments

Summary

 

An earthmoving equipment manufacturer could reduce their procurement cost by 13% through data driven vendor management

Problem in Hand

 

Client wanted to revisit their procurement function as part of their larger initiative of improving profitability. Organization was procuring 3000+ items through 200+ registered vendors.

Solutioning

 

An ABC analysis was done to categorize the inventory on the basis of value, time to procure, lead times. Developed prictive maintenance models for for key machine to get predictability in key spareparts requirements. Developed a scorecard based vendor selection model to ensure uniformity in vendor selection process. Developed vendor engagement score, vendor fitment scores and vendor segments to maximize engagement of listed vendors and to ensure sufficieny of bids at any point. Aided the vendor negotiation team with 360 degree visibility of vendor relation in terms of financials, delivery performance and historic engagements to support a four tier data driven negotiation process.

Impact

 

The initiative put in place a data driven procurement process, higher visibility of vendor relations, segment wise vendor management strategy. This helped in bringing transpartency to the process. Helped improve vendor relations. In addition it improved delivery times, parts rejection rates and cost of procurement. Overall procurement cost were improved by ~13% adding to the bottomline.

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