CASE STUDY

11.73% Average Savings Achieved by a Leading Technology Firm Through Tail Spend Analysis

Sep 22, 2016

Business Challenge

Optimization of procurement spend.

A leading player in the technology sector wanted us to conduct MRO tail spend analysis and help them rationalize the supplier base.

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Situation

Issues with optimizing spend across a widespread supplier base across categories.

The client had USD 80 million MRO category spend, spread over 200 suppliers across four different locations. They wanted to develop an exhaustive spend assessment of their MRO category, in order to rationalize supplier base, improve savings and streamline sourcing strategy.

Solution/Approach

MRO Category tail spend analysis solution for process improvement.

We took an 80/20 approach to target only those sub-categories which constituted less than 20% of total MRO spend. We then conducted data analysis and provided recommendations at the category/sub-category level spend and also helped set up process improvement guidelines.

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Impact

Achieved 11.73% average savings, up to 26% savings in a few select categories, and a 57% reduction in the supplier base.

We helped the client in devising a solution that assisted in the formulation of short and medium-term sourcing strategy and demand aggregation through framework agreements. The client was able to achieve 11.73% average savings, up to 26% savings in a few select categories, and a 57% reduction in supplier base through demand consolidation and re-tendering consolidated global volumes.

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