Weathering economic volatility: Specialty Chemical Manufacturer (CS294)

This story is for CEOs who

1. Are dealing with rapid M&A and organic growth
2. Need to capitalize on the opportunities that come to a major industry player
3. Want to control spend while meeting their current needs

The Challenges 

A specialty chemical company’s procurement processes and strategies were causing their spend to escalate while millions of possible savings were left on the table. The company needed better data, more visibility around their spend, and an upskilled procurement department that understood indexes, market headwinds and tailwinds, and how to take advantage of market movement.

Reducing spend and improving working capital

SGS Maine Pointe:

• Increased control and visibility over spend with company wide spend cubes and dashboards
• Implemented supplier agreements with market (index-based) tracking and pricing transparency
• Improved working capital by arranging supplier-managed storage and inventory
• Initiated a six-step strategic procurement management process across divisions and functions

Lessons learned for other executives

• Major savings opportunities available even in an inflationary market
• Company-wide data is key to creating visibility into spend

The Results

• 10.4% of EBITDA benefits in year 1
• 11% reduction in spend
• 6:1 ROI
• Increased visibility around spend
• Positively impacted the P&L of the company
• Embedded cross-functional team alignment for greater efficiency and effectiveness
• Implemented new procurement management operating system
• Empowered procurement to drive sustainable, year-over-year savings
• Upskilled internal teams with enhanced negotiation training