Case study - Procurement Cost Reduction for Oilfield Equipment Manufacturer
- Multi-national engineering equipment manufacturer providing specialist steel assemblies to the oilfield services sector
- Manufacturing sites in US, UK and Europe
- Local site procurement but little group-wide procurement
- High spend on steel raw material, tooling and consumables. Senior management targeting profit improvement.
- Spend Analysis and Opportunity Assessment identified $1.2m savings opportunity through improved group procurement
- International deployment with consultants in each factory providing co-ordinated procurement
- eAuction for raw material steel to leverage volumes
- Focus on scrap material to increase rebate revenue
Savings of over $1.5m delivered in six months. Working capital improved through consignment stockholding.
- Steel raw material moved to eAuction spot-buy process with 4.25% savings
- Global tooling tender delivering preferred supplier relationship with 6% saving
- Vendor managed consignment stock introduced for tooling
- Scrap process redesigned to maximise revenue streams from high-value materials and index-linked to ensure sustainability of benefits
- 12% saving through sourcing of machine consumables
- Volume-based rebate structures introduced with all key external service suppliers
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