The client achieved annual savings exceeding $25 million (23%), developed a low-cost sourcing strategy in collaboration with an International
Procurement Office (IPO), and enhanced the skill levels of over 150 professionals through extensive training in negotiations, sourcing methodology, executive interviewing, supplier due diligence, and alliance management.
Achieved enhanced pricing stability through proactive commodity pricing management programs.
Secured engineering support for both New Product Development and Product Rationalization initiatives.
The client lacked a consistently applied strategic sourcing process, had not explored low-cost sourcing options, faced pricing pressures from competitors, and its workforce lacked the necessary skill sets. Additionally, employees had not received formal training to address future challenges.
The KGM team conducted an in-depth analysis of the client’s supply base, customer requirements, and annual material and service expenditures. Potential savings opportunities were identified, along with technical and organizational issues hindering cost-effective performance. Specifically:
The KGM Team:
To achieve total cost savings, KGM Strategy implemented a global Strategic Sourcing initiative targeting twelve key categories: Iron & Aluminum Castings, Gears, Electrical Wire Harnesses, Fittings & Hoses, MRO & Production Supplies, Forgings, Machined Components, Fabrications, Fasteners, Oil and Air Filters, and Generators. The KGM team:
Cost savings were achieved by consolidating the client’s supply base and enhancing alliance management. Ongoing cost reductions will be sustained through a new organizational structure, which has increased management awareness of sourcing issues.
