Strategic Sourcing and Purchasing Process
– Mid-Sized Manufacturer

Situation

Mid-sized consumer products manufacturer had centralized its U.S. purchasing organization concentrated U.S. spend with a limited number of suppliers
Additional opportunities for savings existed through global sourcing, optimizing specifications, creating flexible formulations and integrating with suppliers
Poor communication, alignment and teamwork between Marketing, Purchasing and R&D, in U.S. and globally
Senior management needed to find additional purchasing savings to offset rising commodity prices and support expanded marketing efforts

Implemented standard, multidisciplinary strategic sourcing process to improve global integration of Purchasing, R&D, Marketing and Manufacturing/Supply Chain organizations in sourcing strategy and decisions
Strategically sourced $300M in direct material spend, employing value engineering and supply chain optimization methods to reduce costs through spec improvement, supply chain cost reductions and global sourcing
Developed modifications to Purchasing organization to drive improvement in consolidating global spend, accessing emerging market suppliers, aligning Purchasing and R&D, and implementing raw material hedging strategies

Sourcing teams are implementing revised sourcing strategies driving over $25M in annual cost reductions on $300M in spending
Teams have improved flexibility of formulations and specifications to enable timely responses to changes in relative prices of raw materials, e.g., to support
Purchasing, R& and Marketing are using standard processes to align cost reduction priorities, charter initiatives, track progress and resource teams