A global supplier of spare parts had a bulk purchase of 330 million DKK a year for special types of spare parts, but the wholesaler found it difficult to negotiate prices as the parts were manufactured by a handful of large producers. Also, the parts had high specification requirements and volatile ordering patterns. Hence, the management engaged Prokura in a 2-week diagnostic to assess the potential for savings to be made.
Using our proven methodology, we carried out a three-step diagnostic:
- Step 1: detailed analysis of price volatility, supplier fragmentation, order sizes, True Pocket Margin (TPM), etc. on each part number for the past two years
- Step 2:diagnostic of structural elements of the procurement by benchmarking our findings against other comparable organizations.
- Step 3:establishment of several improvement actions and prioritization of the plan for realizing the savings potential.
The results showed that the company could save at least 15 million DKK per year by optimizing the purchasing of the special parts. Based on our priority list of improvement actions, Prokura was asked to support the client in realizing these savings.
To find out more about this case and other industry solutions wholesalers, please contact Christian Bang-Pedersen.