Capex sourcing for Appliances Manufacturer
AV categorized spend to provide basis for organization structure and category strategy as well as mapped the complete E2E process and current organizational structure, providing a baseline for identifying savings opportunities and optimizing resource allocation.
Situation
A centralized engineering & manufacturing group was responsible for procuring capital spend with limited control from local plants. AV was asked to review the E2E capital acquisition process and identify the most effective way to involve the procurment group to be involved as a means of creating a category strategy, SRM, and reducing costs.
Approach
Applied Value performed a strategy impact assessment to determine business and product criticality as well as a product profitability analysis to evaluate which products to keep or kill by each business unit, product line and family. A cost model was also developed to identify the required inventory disposition and impact on working capital.
Results
AV developed an action plan consisting of specific cost reduction initiatives and built a custom sourcing toolset for supporting sourcing with the RFQ and negotiation processes. AV also managed to achieve a reduction of 5-14% in an initial pilot project RFQ and negotiation process.
