Consumer Packaging Manufacturer Drives $500,000 Savings by Reinventing their Production-Purchasing and Order-Management Processes

Situation:

The consumer packaging manufacturer's rapid growth, 36% annually, had left them with increasing order volumes and production planning complexities. The rapid business expansion was stretching already limited resources and left them with no capacity to launch a reengineering project to simplify and increase the efficiency of their purchasing and payment processes. To maintain their competitive edge, the company realized they needed to increase the efficiency of the purchasing and order management processes, improve price compliance from suppliers, and increase positive cash flow. They also needed to create and coordinate order-management workflows to meet tight production deadlines.

Solution:

ICG Commerce worked closely with the company to reengineer current production-order management and payment processes to capture additional savings. To improve order visibility and create production-planning efficiencies, order-management workflows were analyzed from start to finish, not only for the company, but also for the company's direct materials suppliers. A Buying Center was established to proactively work with suppliers on every step of the order-management process. Production orders were followed closely, including proactive status checks with suppliers – 2 weeks prior to the estimated delivery date, 1 week prior, and again 1 day prior to the delivery date – to ensure no issues would prevent on-time delivery. In addition to keeping track of order delivery dates, the Buying Center also confirmed delivery quantities, allowing ample time for appropriate production line set-up and planning. By proactively working closely with suppliers, the company was able to maximize production line efficiencies for the company.

Additional savings were achieved through improved cash management. The Buying Center helped reduce the occurrence of late payments by prioritizing and keeping track of invoice dates along with quantity changes throughout the order lifecycle. Finally, scorecards were developed to measure supplier price compliance and performance.

Results:

These changes enabled the company to better understand their capabilities, meet tight delivery deadlines, and effectively sell the capabilities to new perspective customers. Over the course of 5 months, the Buying Center was able to save the company over $500,000 by implementing these new-order and cash-flow processes, supporting additional revenue and growth goals.