Optimising Procurement Cost and Capabilities Improvement

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Client Challenge

The client was a leading supplier of engineered equipment and systems for critical applications in the global chemical and pharmaceutical markets. The top management believed that there was a potential of procurement cost optimisation and to achieve better efficiencies in the procurement function.

Our Approach

To achieve the objective of reducing procurement cost and improving efficiencies in the procurement function, UC Strategy adopted the following approach:

  • Conducted preliminary spend analysis
  • Understood the strategic and the transactional processes within procurement function and identify process gaps based on best practices
  • Mapped cost saving levers across opportunities which included vendor management, clean sheet costing, best price vendors, inventory management, etc.
  • Analysed and re-define inventory norms for specified items
  • Aligned Organization structure and IT systems

For this purpose, the UC Strategy team conducted extensive discussion with internal stakeholders from procurement, planning, engineering and finance to understand existing processes and also conducted primary research with ~ 10 respondents

Our Impact

UC Strategy adopted best vendor management, and inventory management practices to achieve the reduction in procurement cost by ~1.5% of total procurement spend. Redesigned responsibilities through organization structure to improve the effectiveness of procurement processes. We reduced POs by having a system of Blanket PO/Open PO and consolidation of orders through weekly MRP run instead of current system of MRP run twice a week

 

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