Benchmarks & Client Cases

Profitability Increase
in Food & Beverage Industry 

The Challenge

spend-analysis

Problem


• Poor quality suppliers: low service level, low OTIF and high defect rates

• Frequent stockout of critical raw materials, affecting production

• "Supplier dictates the rules" - limited leverage for negotiation

• Uncontrolled stock of raw materials and subsidiaries



Root Causes


• Different contract conditions for each supplier

• Strategic suppliers not identified

• Purchase of commodities not standardized

• No repercussions for suppliers who fail with service level agreements

The Solution

• Definition of strategic partnership model approach

• Contract renegotiation based on standard contract model designed for each supplier category

• Definition of alternative suppliers for critical materials

• VAVE Projects: Value Analysis Value Engineering in order to identify opportunities to reduce complexity and/or quantity of materials

• Process Design to reduce the Lead Time of the material approval process

The Results

The project had a payback period of 6 months with annual savings in excess of $1.6 million.



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