Hardwiring collaboration across product engineering, procurement, operations and commercial teams to drive sustainability and supply chain innovation
This story is for executives who:
- Are experiencing significant headwinds, with dropping volumes and squeezed margins
- Need innovation in their supply chain strategy to help sustain and increase margins
- Require cross-functional and organizational alignment to drive improvement
The Challenge
This manufacturing company produces a diverse range of high quality products including non-automotive seating, sound dampening solutions, industrial finishing products and metal components. The organization consists of four separate divisions that had been operating independently with little to no cohesive global procurement strategy. Senior executives needed to quickly address margin pressures and drive change. To do this, they had to overcome a number of challenges:
Significant turnover was affecting morale and the ability to drive organizational change
The supply base was riddled with entrenched incumbents, limiting options to improve performance
An ill-defined sales & operations planning (S&OP) approach meant that they were struggling to gain control of their inventory while satisfying demanding customer demand
In a challenging and highly complex procurement environment, senior executives asked Maine Pointe to help tackle these issues and bring the divisions together as one unified procurement organization.
Transforming supply chain capability
Maine Pointe deployed its subject matter experts to drive 23 direct and indirect procurement categories across the four business units and address some of the company’s major pain points. More specifically, Maine Pointe:- Held the company’s first ever supplier forum to directly engage and condition the global supply base
- Deployed its data analytics approach to design a custom inventory simulation model enabling our client’s largest plant to control and reduce inventory
- Trained the internal procurement team on Maine Pointe’s proven six-step process
- Implemented its Leader and Organization Improvement program early in the engagement to engage the executive team and improve focus and alignment relative to supply chain priorities
- Streamlined decision authority to accelerate cross-functional debates and decisions
The Results
Maine Pointe’s subject matter experts worked closely with our client’s procurement team and senior executives to transform the procurement organization.- Improved EBITDA by 8% and delivered a road map to increase this to 16% in year two
- Delivered annualized savings of 3% across 20+ direct and indirect procurement categories
- Lowered inventories and stretched payment terms to save $2M in working capital
- Achieved a 3:1 ROI in year one with potential for a 5:1 ROI included in the year two roadmap
- Moved the procurement organization up the maturity pyramid
Lessons learned for other executives
- Supplier loyalty does not equal market competitiveness
- Expand your supply base to manage tough economic environments to drive cost out and innovation in
- Implementing a rigorous process across functions drives significant financial impact