Success Story - "Raw Materials"
|
Company Description
|
$150
Million Chemical Processing Division
|
Company Situation
and Problem |
Unique but high
cost product; declining sales; high and unstable
material prices; high costs of production; excess inventory; several
suppliers for some commodities; volume not consolidated; purchasing
organization understaffed; contracts not always used or poorly written; users
specified supplier to be used; RFQs rarely issued; raw material generally
purchased on a spot market basis; e-procurement techniques not used.
|
| Paladin Actions & Recommendations |
Completed detailed
analysis of all raw materials, categorized by commodity, supplier, and
location. Reviewed contracts, analyzed unit costs, mapped procurement
processes, applied best practices, identified and prioritized cost reduction
opportunities. Recommended consolidated Sourcing Organization, hire and train
professionals, consolidate volume across divisions, utilize e-RFI, e-RFP, e-RFQ,
and e-Auction tools to maximize price reductions quickly, negotiate long term
fixed price contracts, complete detailed purchase contracts.
|
| Client Results |
= |
Changed from spot buys to long term fixed price
contracts |
|
= |
Reduced materials costs by an average of 6% |
|
= |
Improved contract documentation and and terms |
|
= |
Procurement Operation was subsequently reorganized, upgraded, properly
staffed and trained. |
|
|
Significant Savings in
Tough Commodity |
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