Expert strategic sourcing and greater purchasing compliance for a rubber products manufacturer drive significant bottom line savings

Situation:

This large engineered rubber products manufacturer faced challenges achieving significant fiscal year cost reduction targets. Data gathering was extremely complicated - multiple purchasing systems, including Ariba and SAP, across multiple business units were costly and time consuming to maintain and difficult to aggregate to create a holistic picture of their spend. Many categories had strong and advantageous contracts in place, however, there was limited buy-in at the plant level which greatly undermined the potential savings. Recognizing the need to ensure they could identify and increase the amount of spend sourced as well as drive high levels of compliance, the manufacturer began evaluating procurement outsourcing providers with the right expertise and experience to help them meet their goals.

Solution:

The company selected ICG Commerce to help them drive their savings program. After completing a comprehensive spend analysis, ICG Commerce launched a sourcing program that covered 30 categories and identified over $40MM in savings. To help the company realize those savings, the ICG Commerce lead a detailed program to implement these new contracts at both national and local levels. Implementation activities included re-engineering buyer and supplier business processes, integrating suppliers, communicating new contracts and training.

In parallel, ICG Commerce worked with the company to standardize their indirect purchases through one eProcurement system, Ariba. Transactions for inventoried items, spot purchases and services which had all been transacted on other various systems, were moved to Ariba while ICG Commerce provided catalog management services, supplier enablement and day-to-day purchasing and compliance management through a dedicated buying center. The buying center was essential to meeting the company's compliance goals. All non-catalog related purchases in all target locations were reviewed by the buying center to check for an existing preferred supplier or obtain additional bids. Each location participated in a comprehensive training session that included the eProcurement system, buying center personnel and processes, preferred suppliers and new company policies and procedures.

Results:

In a matter of 3 months, a total of 18 target locations have been introduced to the buying center and participated in training sessions. Suppliers have also gone through training on new processes and company policies. As a result, Ariba usage has increased by 200% the company has achieved 90% or higher compliance - and with every day they get closer to their realized savings goal.