Achieving Standardisation and Consistency Creates 15% savings
A UK FTSE 250 world leading provider of mobile power solutions with a staff of 6000 who deliver solutions to clients in over 100 countries.
Within weeks of being appointed, Odesma had undertaken significant analysis of the procurement operation and third party spend data. This identified a number of areas where significant savings could be made.
Many of the switches, circuit breakers, transformers and other electrical components that go into their mobile power solutions were supplied, almost entirely, by one single supplier across each of the global regions. Upon a closer look at the data, each region appeared to have their own separate supply arrangement with this vendor and worse, there was a real lack of standardisation and consistency of component across the global business.
Identifying an opportunity to facilitate a standardisation of component and a single global agreement with a single supplier.
Odesma launched a programme involving each of the organisations units, regional MD’s, procurement and engineering teams to establish what might be possible.
Within each region, over a period of 6 months, a full review of components was undertaken, which informed the discussions, negotiations and opportunity analysis with the existing vendor and other players in this market.
Gaining agreement across each of the stakeholder group was not without its challenges. There was a significant number of people, often with very strong views…Odesma’s first negotiating role was getting agreement across this internal team on what the requirements were.
- What was the universe of components required for each of the regions, organisations and products?
- Were there opportunities to create a more consistent and standardised approach to the specification?
- Could this be rationalised into a smaller domain?
- Match products that were essentially the same, but often called a different name.
- Strike out of products that had little/ no use.
The review highlighted that it would be difficult to move away from the existing supplier – cradles and holders within the machinery had been designed around these components and discussions with other suppliers suggested that a) they couldn’t match the size and specification and b) couldn’t deliver the range required across the global organisation.
The Odesma team created a leveraged position in their market negotiations by:
- Creating a rationalised, standardised and consistent global product requirement.
- Communicating to the incumbent that benchmarking and alternative suppliers were being considered.
- Giving the incumbent the opportunity to bid for additional products beyond the scope of their existing agreement.
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