Breakthrough Results Personal Care Products
The Client:
The market leader in its product segment
The Challenge:
Energize a struggling Sourcing Team
Deploy our Playbook and Tools to set the right objectives & goals
Lead Supplier Engagement Execution
Enable breakthrough results
By Project Week 1 we had completed benchmarking interviews with a cross section of stakeholders at several sites. This provided a solid value baseline for top down strategy development and bottom up opportunities analysis. By week 4, we had developed a complete set of recommendations on top down strategic and supplier management objectives. We also defined detailed, bottom up service, quality, technology and cost goals using our proprietary Optimization Models. Low hanging fruit was identified for immediate actions. This is very typical of the Pac Pro approach. Assist clients to develop the right strategy and provide the detailed analysis that provides the basis of more effective execution. As in all of our projects, we identified package raw material opportunities because of our extensive research and experience.
The Results:
The primary deliverable was an average 31% cost reduction for the spend category. The Client now has the tools to manage package raw material cost movement, and has specific and actionable supplier performance metrics to ensure gains are sustained. All of this was achieved with improved service, more consistent quality, and better manufacturing productivity.
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Profitability Turnaround through Resin Sourcing
The Client:
A division of a $650MM business was unprofitable and had been earmarked for divestment
The Challenge:
Turn around business unit profitability through resin sourcing in a 3 month period
One thing became very clear immediately. Understandably, supplier relationships were highly adversarial and had not performed well at all. Purchasing resources were very experienced but were, quite simply, employing the wrong tools. Doing the wrong things.
Moving quickly and effectively is a Pac Pro hallmark. In just a little more than 2 months we had implemented a new sourcing strategy. We implemented a prime supplier program with performance improvement guarantees.
The Results:
Dramatic improvement in fitness for use technology, quality, and modestly lower input costs. Our extensive resins research and experience positioned the Client to significantly outperform resin market price development. This completely turned around the Client’s competitiveness and profitability. We also uncovered a new marketing trend which has resulted in new investment in the Division in order to take advantage of growth opportunities. The divestment decision was reversed and the Division has become one of the most profitable in the Company. It is important to note that the improvement we delivered was accomplished in a rising resins market.
Consumer Products
Breakthrough Cost Improvement
The Client:
A small private label household products manufacturer
The Challenge:
Move smartly to implement new sourcing arrangements for all 7 of the Client’s packaging spend categories
Help position the Client to compete in a rapidly changing environment
People often ask us whether our playbook works with small and complex packaging spends. This Client case study illustrates the power of our Playbook when applied to relatively small and fragmented packaging spends.
The first step of this project was to complete an opportunities analysis using our Cost and Optimization Models. This exercise, completed for a fixed and very reasonable fee, helps our Clients to clearly understand what to expect. This is our preferred initial step with Clients. This enables a go forward decision with guaranteed results. In this case, we defined initial cost reduction goals at 13% on average, with a number of other value improvements that can be implemented over the medium term to enhance results further.
This project represents our straightforward approach. The Client then is in a position to decide whether to engage Pac Pro to assist with execution or to proceed independently.
Following a go decision we proceeded to execute sourcing strategies for each of its packaging spend category over a 7 month period. Our engagement was based on a fixed monthly fee plus a significant portion of compensation based on actual results versus base costs and other values.
New suppliers and technology were developed on a selective, high impact basis.
The Results:
New supplier pricing and terms were put in place delivering approximately 18% in cost improvement. More importantly, the package raw material management terms we put in place have enabled our Client to outperform much larger competitors on cost development driven by the unprecedented run up in packaging commodities through 2008. As these markets correct, our Client is positioned to outperform even more dramatically going forward.
Pharmaceuticals
Best Practices and Tools
The Client:
A leading research based organization with operations in Europe and North America
The Challenge:
Introduce multi-functional Team
Facilitate an effective sourcing strategy
Define objectives, goals and execution path
Support supplier conditioning and negotiations
This project illustrates how our approach drives performance. Our proven process included the following steps.
- Chartered a multi-function Team of Stakeholders
- 2 Coaches Benchmarked several manufacturing sites
- Comprehensive opportunity analysis using our proprietary Cost Models
- Detailed report provided to all Stakeholders
- Sourcing Strategy developed through a one day Workshop
- We introduced new methods of efficiently leveraging the entire category producing far better results than traditional inquiry or reverse auctions
- Our coaches supported the Team through Supplier Engagement Execution
We identified the opportunity to rationalize the Client’s supply base by moving to Prime Supplier relationships with two suppliers was identified. We provided guidance on supplier terms; in particular much better terms managing package raw material costs were implemented.
The Results:
Initial cost reduction of more than 30% was identified. 18 months from project start up, the Client is capturing the level of cost, service, innovation and quality identified in the strategic objectives and goals. This has been achieved despite the dramatic run up in package raw material costs in 2008.
Food Products
Excellence in Execution with Breakthrough Results
The Client:
A mid-sized manufacturer of a wide variety of food products which was undergoing an aggressive change effort in manufacturing
The Challenge:
Define the opportunity within a three week period
Work with the Client’s resources to implement new strategies for all 8
packaging categories in an 8 month period
Impart new tools and techniques to the Client’s purchasing function
This private label producer, with a highly complex and fragmented packaging assortment illustrates how our Cost Models, unique methodology for leveraging immediate gains delivers results in the most challenging environments. What is more important, is the supplier terms and performance metrics we put in place to enable improvement over time. Unlike many of our Clients, this company had moved very aggressively on supplier consolidation, so supplier rationalization did not represent an opportunity. Clearly different tools and techniques were needed.
We completed our challenges on time and on budget. We exceeded the cost reduction objectives and delivered significant cost avoidance as package raw materials changed rapidly through our project timeline. Note that unlike virtually any other consulting firm; we take on the risk of raw material markets.
The Results:
Average cost reduction in excess of 15% has been delivered. 15 months following project start, the results have proven sustainable in excess of 20% cost reduction versus 2007 prices, despite raw material market volatility. New suppliers and new package technologies were developed and implemented on a high impact, targeted basis.
The Client now is much better positioned to manage supplier performance. They also have a much stronger understanding of package raw material management.
We also facilitated the implementation of several new technology breakthroughs which deliver superior quality, better manufacturing efficiencies, and enhanced on-shelf appearance and product protection.
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Accelerating Results Through Value Engineering
The Challenge:
Define, develop and implement value engineering projects with high impact
Identify and qualify new suppliers
Facilitate changes in order execution to improve cost and service
This project enables Pac Pro to utilize all of its capabilities. The Pac Pro Project Team includes a Coach working on commercial optimization, a Supply Analyst working on day to day execution and a Technical Director driving value engineering projects from inception through completion.
Using our Optimization Models to assist the Client to identify and verify more than 30 individual initiatives with cost improvement potential of more than 10%. Each of these projects will also deliver ancillary benefits in service, quality technology or environmental impact. Our Technical Director works effectively with the Client’s own resources to form an effective executional Team.
The Results:
Three new supplier qualifications on 18 packages completed within 4 months. Two new packaging technologies placed into rapid age testing. New molds purchased by suppliers at their expense to improve cost on bottles and closures. New materials identified to improve results on flexible packaging. Completed cost reduction of more than 2% of spends within 4 months. Work underway and future projects in development have the potential for more than 8% improvement.
Competitive Benchmarking
Assist the Client in Strategy Development through Competitive Analysis
The Challenge:
Complete a benchmarking analysis of primary competitor best practices
Develop a set of data based recommendations to assist in the
development of a new Corporate strategy
Operate with the highest ethical standards
Working with a large Client we developed critical information to be used as background for the development of a new corporate vision and marketing strategy. Utilizing our resources in Europe and North America, we completed a SWOT analysis of 9 key competitors. Using a process we call “Frankenstein” we defined best of the best strategies and change management being deployed by our Client’s industry competitors. We used this technique to illustrate what best in class performance looked like in the following key areas.
- Marketing and Internet Sales Strategy
- SKU Rationalization
- New Product Innovation
- Pricing Strategy
- Manufacturing Effectiveness
- Sourcing Execution
- Packaging Innovation
The Results:
The Client is utilizing the data and recommendations to assist in the development of a corporate renewal process that is broad reaching and will have dramatic results.
Project Leapfrog Defining Sourcing Strategies Designed to Beat Competition
The Challenge:
Most purchasing consultants work on making their Clients better. This project illustrates how sourcing strategy should be developed. That is, to outperform competitors. In order to outperform competitors you need to define competitors’ performance levels and how they achieve those levels of performance. Strategies must align organizations and is the essence of why sourcing teams should work, but rarely do. Working for the market leader, we worked to develop an actionable understanding of competitors purchasing performance. We developed a complete analysis of:
- Purchasing Alignment with Corporate Strategy
- Supplier Relationship Management
- Quality Strategy & Execution
- Value Drivers
- Print and Package Specification & Technology
- Manufacturing Productivity and Reliability
- Back-Testing Strategy and Execution
- Long Range Comparative Cost Performance
- Speed to Innovation
Our Client’s purchasing resources had been very pro-active over several years but were less profitable than their two largest competitors. Our challenge was to back test our Client’s purchasing effectiveness over time, and define areas where the Client’s performance could leapfrog competition by gaining competitive advantage through more effective purchasing strategy and execution and through new packaging technology.
The Results:
Presented a complete set of actionable recommendations covering the following areas:
- Supplier Relationship Strategy
- Package Specification Changes
- Package Raw Material Management
- Manufacturing Effectiveness linked to Supply Specs.
- Package Converting and Printing Changes
