This story is for CEOs who:
- Want to ensure their decisions are based on data, not instinct
- Need visibility into the true costs of production (BOM)
- Have concerns about meeting their financial goals
The Challenge
Newly acquired by a private equity firm, a metal manufacturer was under pressure to accelerate savings in order to capture value during the first 2 years of its 5-year plan. The company also had an underutilized plant in the US which they hoped to use to inshore the manufacture of products currently outsourced to Asia. They needed help in analyzing the benefits and drawbacks of that business decision.
However, the company had a lean organization with limited resources and high attrition, immature logistics, operations, and procurement functions, limited visibility into spend, and problematic relationships with suppliers.
Delivering the strategies, tools, and protocols for sustained savings and continuous improvement
SGS Maine Pointe:
- Developed analytical tools for complex make vs. buy, onshore vs. offshore decisions that redirected business strategy, including a value analysis/value engineering (VAVE) tool
- Exceeded projected savings in logistics, delivering 15% to 20% through procurement and policy changes
- Upskilled and reorganized procurement, including assisting in selection of a new head of strategic procurement
- Broke down silos and established cross-functional teams that encouraged buy-in for initiatives
- Created repeatable governance processes and protocols, including this week/next week protocols and clarification of owner, responsible, consult, and inform (ORCI) roles
Lessons learned for other executives
- Finding sustainable cost savings requires a total value optimization methodology and process
- Decision making requires the trustworthy data and the right tools to evaluate the data
The Results
- 8%-12% savings in direct and indirect procurement categories
- 15%-20% savings in logistics categories
- Identified opportunities for 20%-30% increase in manufacturing productivity
- Used total value optimization (TVO) to upgrade, upskill, and re-organize logistics, operations, and procurement and improve cross-functional collaboration
- Increased leadership visibility into supply chain with tracking tools
- Improved supplier alignment to goals, specifications, and requirements with supplier conditioning
- Built cross-functional teams by spend categories to deliver better sourcing outcomes and gain buy-in
- Implemented spend, make vs. buy, value analysis engineering, and other tools for data-based decision making
- Drove sustainability of best practices, governance processes, and cost-savings
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Accelerating savings during a 5-year value capture plan (CS300)
Accelerating savings during a 5-year value capture plan (CS300)
