Case Study - Achieving Cost Savings through Improved Procurement Capabilities

Achieving Cost Savings through Improved Procurement Capabilities

Case Study Summary

A large consumer products client was committed to increasing spending on Marketing and Advertising as a percent of sales in the current fiscal year. A key concern for the client was that the additional spend would underscore the organization's need for control and efficiency in direct marketing expense (DME). While sourcing and procurement of direct materials was a core competency and mature function for this enterprise, procurement was not a key capability for most of the indirect spend (e.g., DME). Archstone Consulting conducted a review of the client's marketing procurement capabilities to identify areas for improved performance and cost savings.

The Client

Global food products company.

The Challenge

Implement the procurement business processes and tools for the Marketing and Packaging organizations. This included improving management controls over procurement activities and realizing improvement opportunities.

The Solution

Archstone's approach included a comprehensive assessment of the client's Marketing spend and procurement processes and capabilities. This was followed by a focused Strategic Sourcing effort, which included:

Sourcing Analysis and Execution
Detailed analysis and categorization of the Marketing Spend
Development of category strategies and procurement improvement plans
Identification of high value target categories based on: spend analysis; business priorities; historical sourcing activities; marketplace changes.
Generate high level sourcing strategies and associated savings targets
Process
Analysis of processes and identify performance gaps
Development of recommendations for process gap closure
Governance
Review existing compliance program, policies and requirements, documentation of current program, results, and remediation activities
Develop recommendations for compliance program enhancements

The Results

After a thorough analysis of the client's procurement processes, organization, governance and capabilities, an aggressive sourcing program was launched. The result of this program was a significant, hard dollar contribution to the client's financial results. By the end of the program, identified savings totaled $3.1 Million, between 4% and 9% of the total Marketing spend.