Case study · Manufacturing
Cleaning products maker saves $500K+ by re-sourcing three spend categories
Expecting a hard year after a record one, a cleaning products manufacturer set aggressive cost targets. USC ran a structured sourcing process category by category, cutting costs 13% on average across the first three categories.
Results
$500K+
in aggregate sourcing savings
13%
reduction in spend, on average, across the first three categories
4:1
return on investment
Savings are aggregate across the first three categories.
The situation
Business was booming and record profits were expected, but the whole industry expected the following year to be hard. Management set aggressive savings targets for direct and indirect spend, including raw materials and the way they were sourced.
What the assessment found
- Raw materials sourced worldwide for U.S. assembly
- Spend not yet grouped into categories with clear strategies
How the work was done
Spend: set category strategies
Analyzed spend, grouped it into supply categories, agreed priorities with management and built a strategy for each category.
Suppliers: widen and qualify
Set supplier metrics and specifications, cleansed vendor data, qualified incumbents and searched for new suppliers before a formal selection.
Contracts: bid, negotiate, transition
Ran bids, negotiated with selected vendors, executed contracts and planned the inventory transition, then repeated the process for each category.
13%
reduction in spend, on average
“Because the process is so standardized, so clear and well-defined, it allowed us to really filter down to the suppliers we wanted to work with. In the end, it saved us a considerable amount of money.”
Lasting impact
With the first categories delivering, the company extended the work to four of the world's most volatile commodities.
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