Synergy and single sourcing result in efficiency and additional savings
What clients say
Start
Being responsible for a group of ‘Capex categories’, representing procurement for a group of ‘independent companies’ I had to procure a number of same ‘products’, as they were all close to amortization soon, technically and/or economically. Most of the companies were using a different brand and their individual goals were clear: “proceed with our present brand”! Budgets for this investment were at a different level for each company.
Approach
The project team was formed with a representative of each company, led by me. After approval of the pre–conditions for the sourcing process, set up by myself, the sourcing process could start. Besides the present 4 suppliers, 2 new parties were invited to present themselves, of which 3 parties could let their ‘products’ tested for 2 months and reviewed on pre-approved objective criteria. Only the 2 best scoring parties were invited for the negotiation round, based on a 10 year TCO (Total Cost of Ownership), with a cost breakdown on fixed- and flexible costs.
Result
The cost breakdown provided a good negotiation position, in particular with regard to the flexible (expendable) costs, generally contributing for the main part of the supplier’s margin. Due to the significant number of ‘products’ and the length of the contract, both parties were eager to give it their best shot. The final result was an unexpected and above average saving on both the investment, the 10 yrs maintenance contract and the expendable goods. The budget of all companies involved was widely respected.