Continuous Process Improvement
Sourcing – Centralized purchasing – Process redesign through Data Analytics
About The Client
A US based company providing solution for Down hole pumps and services for drilling
Project Overview
- Review overall spend for 56 service centers
- Supplier rationalization/Process redesign
- Cost savings
Challenges
- Service centers geographically spread over US and Canada
- No structured purchasing, too many suppliers
- Suppliers providing different pricing for same parts
- No contracts with any supplier
- Incorrect or no part numbers impacting margins
- Maverick buying patterns across service shops
Solution
- Analyze PO data/usage for 12 months and identified 7 suppliers with more than $9MM spend
- Price negotiations with individual suppliers
- Created centralized purchasing and updated ERP, service centers will only create requisitions
- Reduced number of suppliers, selected supplier based on best geographical location, price and quality
Business Impact
- Estimated savings of $ 5.2 million from negotiations and having price agreement for 12 months
- Improved parts delivery to all US locations by more than 30%
- Improved margins by using correct part numbers
