Procurement Transformation

Siecap Team members assisted a multinational with global procurement transformation for direct materials.

The Background

The client is a global leader in the design, manufacture, and delivery of Mining Equipment.

With the end of the Mining Boom, the organisations situation changed from struggling to meet demand and high returns on capital, to overcapacity and second tier returns on capital. Cost control became an essential aspect for the business to recover and maintain market share. Procurement became important again in this process, and needed transformation of its capabilities to meet this challenge. The Supply Chain and Procurement functions where combined to further focus collaborative performance improvement.

Indirect procurement was lead from Group procurement.

Objective

Upgrade Category Management, SRM and Supply Chain Management globally. Key elements where:

Refocus Category Management from a supply reliability focus to a total cost of ownership approach to deliver substantial sustainable savings

Establish a Manufacturing Footprint Strategy to allow rationalization of manufacturing assets.

Establish Cross Functional Category Teams for Supplier Management, Supplier Improvement & Development and Supply Chain Management

Performance Management: New Savings Reporting Procedure/Project Management systems. Refreshed KPIs linked to new incentive plans to drive performance

Emphasis & Scope

Emphasis of the transformation was to:

Establish a pipeline of TCO savings opportunities to be executed with Key Suppliers
Re implement Supplier Management, with a particular focus on Contract Management

Scope:

Global
All Direct Categories and Country Units, including best cost country sourcing