PROCUREMENT AND SOURCING
Developing Future-Proof Procurement Organizations
Procurement and sourcing have become highly-complex functions in recent years: in addition to their core task – the continuous reduction of costs – they now share responsibility for organizing global value networks, innovative capabilities, the agility of the organization and product quality. At the same time, procurement holds primary responsibility for determining whether a company is satisfying national and international compliance requirements, as well as stakeholders’ social and economic expectations.
msg industry advisors helps those in a company responsible for procurement to manage these challenging tasks – from the development of a procurement strategy, the organization of sourcing networks and the optimization of the procurement organization to the development of efficient business process and compliance management and the implementation of high-performance IT systems. Just a few of the areas covered by our consulting portfolio in the field of procurement and sourcing are:
- Material group & supplier strategies
- Right shoring: local, regional & global sourcing
- Supplier management & development
- Cost structure analyses & cost modeling
- Value design & cost engineering
- Procurement processes & organization
Our supply chain consultants’ references emphasize our experience and successful collaborations with companies of all sizes and from a wide range of industries.
Category Management for Maintenance:
- Increasing the supply transparency by redefining the categories and subcategories for direct and indirect material
- Derivation of savings initiatives for each category, including estimation of the savings potential and a cross-functional realization plan
- Initialization of the degree of implementation methodology, including a tool for monitoring the ramp-up of cost reduction compared to planned savings
Right Shoring – Global vs. Regional Sourcing::
- Development of a cost structure analysis tool for comparing product costs in China to those in Central and Eastern Europe, under consideration of the total cost of ownership
- Benchmarking of costs, logistics and quality in the lead-up to a global sourcing strategy
Global Sourcing and Set-up of an IPO (International Purchasing Office) for Direct Material:
- Cross-functional identification of categories / subcategories feasible for global sourcing
- Supplier identification, evaluation and recommendation in China for selected pilot
- Product Implementation of the global sourcing strategy with a mid-term transfer concept to set-up a sourcing hub in Asia, including a business case and list of measures for realization of the strategy
- Establishment of an IPO in China, including operational and organizational organization, as well as legal aspects; recruiting, training and coaching of the new SCM team in China
Global Sourcing and Set-up of an IPO (International Purchasing Office) for Indirect Material:
- Country profiles: Macro-economic overview of the Asian countries and projection of each country’s strengths as a potential sourcing market onto 50 direct and 60 indirect sub-material groups
- Roadmap for an APAC procurement office: the new organization following the the purchasing processes, including interface definition such as reporting lines and the selection of the suitable site
- Return-on-investment scenarios: Set-up costs vs. savings under consideration of the total cost of ownership
Value Engineering und Cost Modeling:
- Validation of alternative packaging design concepts in light of manufacturing costs through cost structure analyse
- Recommendations for technical optimizations in terms of design-to-cost as a trade-off between industrial design, customer value and costs as decision memo for the executive board
Cost Engeneering:
- Should-cost calculations for hardware designs based on cost structure analyses, including derivation of alternative supplier and manufacturing concepts
- Development of a tool for identifying cost drivers along the design and development processes
- Optimization of the cost vs customer value ratio
Category Management, Supplier Reduction and Negotiation:
- Establishment of centralized procurement and set-up of category management; reduction of the number of active suppliers and increase of the purchasing power
- Savings realized through pooling of demand to enable volume xxx as well as improvement of payment terms and conditions
- Selection of preferred suppliers as strategic partners in order to generate win-win situations through joint cost reduction initiatives
- Realized savings through pooling of demand and frame contracts as well as improvement of terms and conditions of supply
Global Sourcing and Supplier Optimization:
- Benchmarking the existing supply chain footprint (China, Malaysia, Singapore, Australia)
- Pre-negotiated prices, payment terms and conditions with an alternative supplier in Taiwan that has greater vertical integration in order to reduce sourcing complexity
- Calculation of ramp-up costs to change the supplier
- Proof of concept how tzo realize 25% of savings, while cutting delivery times in half and improving cash flow at the same time