Leading industrial packaging company drives measurable savings in under-resourced categories through procurement outsourcing

Situation:

As a world leader in industrial packaging products and services, the company recognized that in order to continue to grow and maintain their competitive position, they needed to better manage expenditures. While some long-term contracts were in place for categories such as air travel and healthcare benefits, the majority of their indirect spend was decentralized across 68 locations around the globe. Without the resources and tools needed to focus on these indirect categories, the company had not been able to leverage their spending and negotiate optimal contracts with preferred suppliers. They knew that they needed to put more focus on these purchasing categories in order to reap the significant savings potential. The question was how?

Solution:

The company decided to outsource more than 20 buying categories, including Chemicals, Fuel Oil, Transportation, MRO, Travel, IT, and Energy to ICG Commerce. Beginning with a detailed spend assessment, the company and ICG Commerce developed a strategy to drive savings, automate the purchase-to-pay process, and improve their ability to capture and utilize detailed spend information to drive ongoing cost and supplier performance improvements. This four-part strategy was aimed at leveraging ICG Commerce's indirect procurement infrastructure in order to drive significant and continuous cost reductions. The plan included:

• Establishing a sourcing strategy and program to identify cost reductions
• Establishing a detailed implementation program involving the joint procurement team, preferred suppliers, and each of the key manufacturing facilities
• Deploying a hosted purchase-to-pay solution that would allow requisitioners to quickly find and order items from preferred suppliers while capturing line-item-level detail for future review and use
• Establishing a category management program to leverage data and market insights to sustain and improve cost reductions

Results:

In just 9 months, the ICG Commerce team completed the strategic sourcing and implementation of nine indirect buying categories, eight catalogs and a total of more than 400,000 SKUs. The team has launched sourcing projects for an additional ten categories and automated the purchase-to-pay processes, training over 350 users across 57 locations using a mixture of on-site and web-conferencing training sessions. Now actively managing nearly 60% of the company's indirect expenditures, ICG Commerce has delivered over $1.8MM in savings and is on track to achieve their 90% compliance target.