Office Supplies – Diversified Industrial Conglomerate

A company with over 270 global production and sales sites faced a fragmented approach to purchasing $6MM in annual office supplies. This included a mix of major global suppliers and numerous local vendors across its diverse business units.

The KGM team of strategic sourcing experts collected and analyzed the client’s office supply expenditures, vendor relationships, existing contracts, and location-specific requirements. To gain deeper insights into the client’s needs, the KGM team:

• Visited high-spend locations to understand their specific needs and service expectations.
• Deployed survey tools for all other locations to ensure comprehensive coverage in developing the final sourcing strategy.
• Focused on high-volume, standardized catalog purchases such as office supplies, paper, and toner.

To achieve significant cost reductions, KGM Strategy executed a Strategic Sourcing initiative targeting office supplies with an annual spend of approximately $5.2 million. The KGM team:

• Collected and consolidated AP data from 40 operating companies spanning 270+ individual locations.
• Received and categorized line-item purchasing data from ~120 individual sites.
• Created a tailored market basket (hotlist) of items for each country within North America, Europe, and Asia where the client had procurement operations.
• Developed a non-market basket (off-list) pricing framework and quote package to address unique supplier pricing structures.
• Negotiated final agreements with leading multinational office supply providers, prioritizing lowest total cost. Key negotiation topics included implementation incentives, volume rebates, payment terms, delivery, cost reduction programs, and pricing.
• Trained the client’s team in Strategic Sourcing Methodology, Executive Communications, Negotiations, Executive Interviewing, Supplier Due Diligence, and Alliance Management to ensure the sustainability of this transformation effort.

Cost savings and service enhancements were achieved by leveraging the client’s global presence.

• Achieved $1.8 MM (35%) in annual savings and streamlined the supply base to a single global provider for all office supply needs.
• Implemented pricing stability mechanisms for volatile procurement categories like paper and toner.
• Assigned a senior executive liaison to oversee the relationship with the awarded supplier and ensure its success.
• Established standardized reporting and measurement processes with the awarded vendor to track compliance and savings.
• Introduced an alliance management review process to ensure the ongoing success of the partnership.