Cost reduction program on 6 private label Purchasing categories
The European leader in manufacturing biscuits for private labels was bought out by a multi-site Corporation that was developing through external growth.
Facing the effects of both a significant increase in the price of agricultural raw materials and a substantial increase in its production (strongly affected by the economic crisis), the company wanted to reduce its purchasing costs to be able to preserve its profit margins.
CKS was mandated to study opportunities to reduce costs of all the company's expenditures except for raw materials and to cut costs wherever possible.
After an audit, CKS proposed a cost reduction program on the 6 most opportune categories:
- Road goods transportation
- Energy (Gas / Electricity)
- Spare parts and consumables
- Work Clothes
- Reduce purchasing costs while maintaining or improving quality and service for these categories which have a tremendous impact on the business.
- Closely ally the Purchasing teams with the Operational Departments in implementing the cost reduction program. Create synergies among the Corporation's different sites.
- Initiate the necessary changes (e.g., develop a new supply source) while carefully taking into account end-customers' requirements (Distributors) and both industrial and human constraints.
For the complete duration of the mission, CKS mobilised a team of eight consultants some of whom possess in-depth expertise in particular fields (Cleaning, Energy, Packaging).
The solution was to bring all the purchasing teams closer together and to closely ally them to the Clients' Core-business management. The process took place in 6 main stages:
- Collect and analyse information concerning needs, identify potential opportunities
- Expand sourcing, identify innovative, high-performance suppliers fulfilling the Clients' expectations as well as responding to the Company's own constraints (5 industrial sites spread out across France)
- Write up specifications
- Steer Consultations
- Negotiate and arrive at contract agreements
- Help to implement the proposed solutions (mainly certifying new suppliers)
For each of the categories the process took between 3 and 6 months. A number of the categories could only be addressed one after the other.
- Substantial savings (several million euros), successful implementation of the cost reduction program
- A renewed, dynamic supplier pool serving the company in its search for innovation and ability to remain competitive
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