Success Story - "Chemicals"
$600 Million Chemical-based Consumer Products
Company Situation and Problem
Multiple chemicals blended into finished product. Margin pressure from rising chemical feedstock cost. Lack of price transparency.
Paladin Actions & Recommendations
Grouped individual chemicals into chemical families with similar feedstock. Competitively sourced chemical family from producer capable of supplying all items in the family. Large volume items were sourced for bulk delivery direct from producer. For lower volume items, delivered through distribution, pricing for product was obtained based on the total family volume. Pricing for distributor warehousing and distribution was competitively sourced.
- 15% cost reduction
- Cost changes indexed to feedstock change
- Warehouse and distribution cost do not vary with feedstock changes
- Increased cost transparency