Success Story - "Sheet Metal Parts"
$100 Million IT Equipment Company
Company Situation and Problem
Unique but high cost product; Rapidly increasing sales; high sheet metal prices; high costs of premium transportation; poor material forecasting and inventory management; purchasing organization understaffed; contracts not always used or poorly written; RFQs rarely issued
Paladin Actions & Recommendations
Completed detailed analysis of Sheet Metal Purchases. Reviewed contracts, analyzed unit costs, mapped procurement processes, applied best practices, identified and prioritized cost reduction opportunities. Consolidated monthly volume and Negotiated order size discounts. Reviewed costs of Hard Tooling, reduced parts prices, and investment payback and convinced customer to fund purchase of Hard Tooling by customer.
- Order size discounts quickly reduced Sheet Metal Parts prices by 5%
- Improved contract documentation and terms
- Hard Tooling project reduced Sheet Metal Prices by over 25%
- Procurement Operation was subsequently reorganized, upgraded, properly staffed and trained.