Procurement Savings Plan

Various levers can still be activated to optimize costs and control the margin
Case study
10/09/2014

Context and challenges

A large industrial group, in a business model encompassing business and engineering, was facing strong competition from new players of emerging countries. It introduced a savings program to make its sales offering more competitive and redevelop its market share.

Approach and methodology

A cost-cutting project was launched, focusing on three project areas:

- Defining and deploying procurement strategies and introducing category managers into crossfunctional equipment categories: launch of global Requests for Proposal (RFPs) and group Framework Agreement negotiations
- Setting up collective negotiations: identifying procurement and investment projects that are common to the various Business Units (BUs) and mutualizing spot volumes
- Redesigning to target cost: implementing joint engineering and procurement task forces to standardize and define the target equipment specifications with a view to cutting total cost; implementing a real-time benefit management process and tool.

Results

- 12-15% savings generated on group invitations to tender
- A controlled savings management process permitting a 10% savings forecast by 2015.