Strategic Sourcing and Multi Tiered Inventory Processes
Siecap is a project management and advisory firm specialising in providing a full range of corporate and operational services across the asset and investment lifecycle which assist our to clients optimise cost, increase performance and manage risk.
A strategic sourcing review was completed, enabling a reduction in purchasing staff, improvement in operations and a cost saving of 14 to 22% across key categories
The Background
100+ suppliers being called upon by 16 different supply groups based on very localised personal motivators
Above the market pricing being paid with unreliable and poor logistics; coordination with managed supply, typically direct to sites across QLD, TAS and WA
Little managed purchasing leverage and indifferent accounts payable process
Non-labour spend averaged about $400mpa
How the Siecap team helped
Tendered to very wide market for innovative approaches to reduce purchase prices and supply system costs. Settled on 14 suppliers for non-OEM non-critical production spares
Established all supply agreements with various forms of purchasing automation
Introduced life cycle cost considerations and fixed hourly costs as key determinants in tenders for primary production equipment procurement
The Results
Purchasing staff reduced from 16 to 6, increasing productivity from 500 order lines per month to more than 4500 per month. Warehouse throughput increased from $500k per week to $2.5M per day
Purchase savings ranged from 14% to 22% depending on the category. Process savings reflected in reduction of inventory from $13.5M to $8.5m, overall staff reduced from 42 to 29 and two largest sites achieved OTSDP (fill rate) at the site of 99%
