Leading Building Materials Company: Fortune 500 building products and paper company builds eSourcing capabilities and savings with ICG Commerce

Situation:

The sourcing group of a $30 billion pulp, paper and building products manufacturer understood the value of eSourcing for greater efficiency and cost savings, but lacked sufficient resources and knowledge to build capabilities on their own. Sourcing efforts were also hampered by the fact that the enterprise operated as five separate divisions and the sourcing organization was not able to aggregate the company's total purchasing volume for negotiation leverage. With increased competition and an immediate need to reduce costs, the group set a goal of achieving 10% savings in six months using outside sourcing experts and tools.

Solution:

Drawing on their extensive sourcing and category expertise, ICG Commerce conducted a detailed assessment of the paper company's expenditures to identify categories where eSourcing could be effectively utilized to negotiate optimal supplier agreements. To accelerate the initiative, ICG Commerce helped the company create cross-functional teams and facilitated a rigorous strategic sourcing strategy in each category. To increase competition for additional savings while ensuring equal consideration for the participating suppliers, ICG Commerce conducted an online reverse auction in each of the categories and managed all supplier training and communication on behalf of the paper company.

Results:

The effective use of eSourcing as part of a broader strategic sourcing process produced cost savings of $11 million across 9 categories in just 6 months. The paper company gained extensive knowledge and training from ICG Commerce, and as a result, the company now uses eSourcing and the best practices acquired for sourcing the majority of their other purchasing categories.