Background

Our client is a manufacturer of frozen foods, with 3 sites, based in the UK. Across all sites, there is a common need for a large amount of non-stocked consumables – items like PPE, uniforms, janitorial and paper products.

With several buyers across the three sites, the company was concerned that a lack of budgetary control was leading to fluctuating/inflated prices – and that there was a not enough visibility around supplier on-time/in-full delivery performance and quality. They also felt there was a significant number of possibly duplicate or marginally different specifications for the portfolio of circa 350 products and that PO errors and the number of deliveries were excessive. The client also wanted to drive cost reductions.

Approach

The team at Pare analysed the purchase data to identify inefficiencies, reducing the range of standardised product specifications from around 350 to just 131. This product range, along with a defined set of stringent service requirements was then sent out to tender.

Outcome

As a result of the tender exercise, the supply base has been reduced from seven to just two (reducing deliveries), with both successful suppliers agreeing fixed price contracts which deliver a significant 16% cost reduction.

The introduction of service KPIs provides clear visibility of supplier delivery performance which has led to much more consistent supply and quality.

A formalised price increase review process has been implemented which has not only eliminated PO errors, but also given the business better control and greater ability to forecast and budget for the future.