Cost Base Reduction in Manufacturing

The Client

A major UK established manufacturer of heavy engineering units including the aftermarket fulfillment, a global business with over $1bn turnover.

The Objective

To reduce the cost base in one of their key manufacturing sites in the areas of factory operations spend, business and corporate services. This was a fairly “un-tapped” area of 3rd party spend for the customer as their focus had always been on direct and raw materials for the makeup of their final product set.

Odesma Impact

We brought in a small team of spend analysts and category SME’s firstly to set up a spend analytics B.I. dashboard for this business to understand the high levels of spend and specific suppliers that were currently providing products and services to support this area of the business.

From this we were quickly able to provide to them an opportunity assessment and business case, including ROI, for us to deliver to their target savings over a 7-month period. We also consolidated many of their “tail suppliers” into a more consolidated supplier base and negotiated new contracts with replacement suppliers.

The Results

We performed over 20 separate spend savings projects over a 7 month period delivering annualised savings of over 20%. We consolidated the supplier base and introduced new supplier fulfilment strategies for many areas of operational spend such as PPE, Tooling and Packaging. Once we had completed this “quick win/cost out program” we successful transferred the knowledge over to a BAU team for ongoing continuous improvement.