Direct Materials Cost Reduction
Low cost sourcing of a key Direct Material
Our Client:
Our client is a major multinational with manufacturing in both Europe and North America. Raw materials are sourced from around the world but predominately in Europe.
Project:
Lime Associates was briefed to undertake find a new source for a key polyamide material for a significant product line. The new supplier had to offer not only a cost saving but also reduce risk and maintain quality.
Actions:
Lime Associates used our iCEO (Intelligent Cost and Efficiency) methodology developed in conjunction with Warwick University to develop a rigorous brief for the new supplier. All stakeholders were involved in a review of the specification and design of the material and all the delivery criteria. Demand forecasts were investigated to ensure that a reliable schedule of orders could be offered to the new suppliers.
We also utilised the e-RFX on line auction software within iCEO to ensure that the tender and bidding process was easy and efficient to manage.
Lime Associates contacted 48 suitable suppliers from North America, Europe and Asia and full bids were received from 8.
Audits were arranged with the most competitive companies.
Result:
Lime Associates have located a source in Korea who fulfilled all the criteria. A $600k per annum cost saving has been achieved for a material that matches all our client’s specification and commercial criteria. As we have free trade agreements with Korea, the supply and costs were secure.
Summary:
Working to tight deadlines, Lime Associates used its extensive Medical Industry knowledge and networks to deliver cost savings and reliability of supply. The new supplier has robust demand forecasts to work to which helped to secure the best prices. The e-RFX process as managed within iCEO was a godsend to the team as the whole tendering process was made easy for both the client and the tendering companies.
