Supplier optionality and supplier qualification acceleration enables company to fulfill high demand and drive double-digit top line growth
This story is for executives who:
- Are facing rapid demand but can’t fulfill orders
- Suffering capacity and raw materials challenges
- Reliant on a few suppliers.
- Have immature procurement and certification processes and KPIs
The Challenge
This world-leading manufacturer and distributor of consumer products was experiencing a 300% increase in demand due to a Covid-driven desire for “stay at home” activities and structural changes in the industry.
The organization had severe capability and capacity gaps and was facing a six month backlog in customer orders. Significant risk was embedded in their supply chain with supply chain functions operating at a low level of maturity. The procurement function was spending 100% of their time short term “fire-fighting” instead of driving value creation for the business.
Driving accelerated results in under 12 weeks
With the company facing a rapidly growing order backlog and degradation in customer service, SGS-Maine Pointe’s SMEs in procurement, certification and data analytics developed a comprehensive and pragmatic journey for rapid improvements in the following key areas:
- Developed and implemented robust procurement strategies for all critical raw materials required for production
- Conducted rapid global sourcing events for key raw materials and provided supplier site-visits to accelerate qualification
- Established C-Level meetings organized to create traction with non-incumbent suppliers
- Established structure and resource accountability for key qualification activities and overall program management
- Leveraged SGS’s certification expertise and presence in over 140 countries to rapidly cut product UV degradation testing (TAKT time) from 3100 to 1000 hours and achieve new product qualification fast
By improving supplier optionality and supplier qualification acceleration, the company was quickly able to reduce a burgeoning order backlog, address poor customer service and help executives and the company avoid public and shareholder criticism. Fulfillment and customer service improved significantly leading to a significant increase in net sales and achievement of growth projections of 50% year on year.
The Results
SGS-Maine Pointe helped our client achieve the following results in a supply constrained and high demand environment:
- Unlocked materials and fulfillment bottlenecks to achieve growth projections of 50% year on year
- Identified new sources of critical materials needed to fulfill demand
- Achieved supply commitments for non-incumbent, domestic suppliers to meet production requirements and achieve revenue growth
- Accelerated global supplier and product qualifications and achieved 50% reduction in critical qualification time to production cycle for a critical raw material category
- De-risked the supply chain, despite the focus being security of supply, and identified 3.5% in savings in a
high inflation market - Improved operations including accelerating and upgrading qualification processes, people skills
and procedures
Lessons learned for other executives
- You can create supplier optionality in a resource constrained market to meet demand fast (people)
- Addressing sourcing constraints to fulfill demand (growth) can have a double-digit positive impact
on your share price - You can accelerate the qualification process of new suppliers to improve material and product
time to market