Transforming indirect procurement

The strong economic growth of the past decade provided machine manufacturers with full order books and reliable sales. With the focus on growth and delivery capability, cost structures often could not be efficiently developed at the same pace. The task now is to use the phase of market calm to make up for lost ground.

The company began to leave its comfort zone just in time to put its procurement organisation and processes to the test and to initiate cost-cutting programmes. We were commissioned to work with the responsible departments to optimise the procurement of indirect requirements and set it up for the future.

In the course of a potential analysis, all costs in the indirect area were presented transparently. This also included products and services that were procured by the departments as “maverick buying”. The comparison with our benchmark database identified considerable savings potential, especially in the logistics, packaging and IT product groups. Savings initiatives were jointly defined to implement these options within a 12-month programme.

During implementation, we worked with procurement and the specialist departments to record the requirements for the individual categories and brought them up to date so that, in the end, only exactly what is actually needed is purchased. “Our IT service desk used to have several employees on site. Of course, it is pleasant to have problems solved quickly at the desk. In many cases, however, remote support is also sufficient. This saves costs and time on both sides” explains the Head of Procurement.

By using procurement levers, such as large-scale tenders and the bundling and respecification of requirements, the savings potential defined at the beginning of the project could be exceeded by 30 percent. Through our team-oriented co-sourcing approach, the procurement staff was also trained “on the job” and received helpful templates for use in their product groups.

 

In order to be able to act more professionally in the future and to develop potentials independently and sustainably, a new procurement organisation was introduced: The procurement department was separated into a strategic and an operative procurement with clearly defined responsibilities and a stronger coordination in the individual commodity groups was decided between the two locations in Germany and the Czech Republic. We supported this with a benchmarking of the previous strategies, roles and processes as well as recommendations for action.

In indirect procurement, a cross-site and cross-departmental procurement vision was formulated, which makes the goals tangible for everyone and clearly structures the procurement activities and the cooperation with the demand drivers. A tendering calendar was drawn up in order to regularly check procurement conditions on the market in the future and to cooperate with the most efficient suppliers.

To increase the efficiency of procurement, we also conducted a gap analysis for the digitalisation of individual processes and identified suitable tools that best meet the company’s requirements. Here, too, the company aims to make procurement fit for the future.

 

 

 

Results

• Savings 30% above plan
• Procurement strategy and vision created for indirect procurement
• Responsibilities and interfaces for all indirect requirements defined
• Further development of employees through “training on the job
• New procurement organisations introduced in Germany and the Czech Republic
• Tendering calendar for indirect requirements created
• Digitalisation potential identified