Strategic Procurement: Organizing to Reduce Global Spend
Carbon/Graphite Products Manufacturer $1.2 Billion Sales Revenue
A global manufacturer of carbon/graphite products expanded world-wide operations by means of several acquisitions. These acquisitions provided the company with a base of operations encompassing 33 locations in the United States and Europe. The evolution of company growth through acquisition resulted in a fragmentation of purchasing functions, and it became difficult and nearly impossible to effectively coordinate or manage purchasing as a corporate entity.
With over $600 million in annual global purchases, the company realized that it was not achieving the maximum procurement leverage that was possible, and as a result was spending far in excess of what it needed to procure materials and services. Rockford Consulting Group, Ltd. was asked to develop a company-wide purchasing organization strategy. The objectives of this effort were to:
The review of purchasing locations and rationalization revealed substantial inconsistencies in the company's ability to leverage purchasing expenditures across locations with repeatable high quality practice. The main causes were found in the basic company purchasing infra-structure: how purchasing is organized, the practices and methods used to purchase materials, goods and services, and how global purchasing is managed. Based on our findings, we recommended substantial changes in the role of corporate purchasing, organization structure, upgrades in global professional purchasing competency, improvement in audit controls, and the development of purchasing strategies world-wide.
We identified major cost savings opportunities in leveraging purchasing expenditures. Based on information provided to us, we determined the benefits for improvements: