Leader in Computer Server/Data Storage
Service Provided
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Cost Optimization
Industry
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Computer Server/Data Storage
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In this case, we examined a company's procurement costs with a leading partner in the industry, Impendi Analytics. We were able to work together to understand where the company could work to improve their supply chain.
Case Study: Cost Optimization
$30M (8%)
In excess of
Savings
The Challenge:
The challenge of this case surrounded the client that had a Procurement organization that had become stagnant in their ability to aggressively drive out costs.
Baseline Request:
The client requested we engage with industry leader (Impendi Analytics) to provide subject matter expertise in Mechanical, Thermal, and Interconnect commodities. The client's objective was to identify savings opportunities, accelerate the capture of savings and provide external baselines with regards to market pricing and Procurement best practices.
Findings:
We found evidence that the client's procurement organization was too focused on existing suppliers and lacked clear understanding of external market pricing and range of negotiation levers during the 22 month engagement. We also found behavioral complacency in focus upon cost downs from inflated pricing rather than market based cost justified pricing. We implemented new market focused levers to accelerate and deliver targeted savings.
Results
The result of this case ended with the client accepting the initial observations and allowed targeted effort to disrupt both internal and external supply chain. Levers, such as supplier outreach, share shifting, and identification/inclusion of disruptive suppliers in competitive bids drove savings to capture in excess of $30M (8%).
Cost Optimization Lessons Learned:
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Supplier Relationship Management in tandem with Strategic Supplier Development
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Market Cost Leadership/Benchmarking
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Champion/Challenger Internal Commodity Competition
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Multi-Departmental Sourcing with Product Life Cycle Cost Expectations
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Art of the Possible Negotiation Mentality