Procurement Spend Reduction for one of India 's leading Integrated Semi-finished Steel & Power Company
Title: Analysis of end-to-end procurement to pay process including sourcing and planning, supplier collaboration, procure to pay, inventory management and reporting to reduce spend and improve efficiencies
Background:
- Client is a fully integrated manufacturer of mild steel wires with rights for iron and coal mining for captive consumption
- Main products are: Sponge Iron, Steel Billets, Ferro Alloys, HB wires, Oxygen, Fly-ash bricks, Power
- Operates through eight business units: SID, Power plant, Ferro alloys, Wire division, Oxygen plant, fly ash brick plant, Equipment and Pelletization
- Company’s strategy has been to fully integrate the Company from mining of iron ore and coal to manufacturing finished wire, to ensure better margins
Business Problem: Client wants Procurement to Pay Process Improvement for Efficiencies and Cost Reduction
Our Approach:
- Phase 1 - Understand client Business & Supply Chain Objectives, Understand As-Is Procurement to Pay Process & Total Cost of Ownership (TCO), Analyze & evaluate current state procurement process and TCO vis-à-vis requirements and best practices, Provide recommendations, define To-Be Procurement to Pay process, Build 2 year implementation roadmap with business case
- Phase 2 -Implementation of recommendations and roadmap
Our Solution:
- Sourcing savings - Increased understanding of spend by supplier, category and by business unit.
- Supplier management -Going to OEMs directly, Optimum set of suppliers , Contract and price audits, Best price comparisons
- Reduction of maverick buying – Reduced buying from un-approved suppliers and through non-approved channels or off-deal
- Inventory management - Optimum levels of inventory and thus affecting the balance sheet and improving Return on Assets
- Purchase to pay lead time reduction - Optimizing planning by planning for and improving lead times
Benefits:
- Planned 15% reduction in material cost across all categories of materials