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Optimizing sourcing initiatives improves supply chain efficiency of US auto maker in Asia
A leading automotive manufacturer sought to identify and implement supply chain cost reductions globally. The company needed an experienced third-party consultancy to conduct a thorough analysis of the purchasing transactions database.
ARC Consulting was assigned to support the project in Asia and Africa by identifying areas of significant potential savings and by implementing these opportunities through new supplier market testing and price negotiations.
Opportunity
The automotive industry is becoming increasingly competitive. The client seeks to gain an advantage over its competitors and stay ahead in the industry with a leaner supply chain. Therefore, the client turns to consultants to review its supply chain and identify potential saving opportunities every few years.
Savings opportunities are generated primarily by high volume purchasing spend categories, a cost reduction of only 5% can be quite significant when taking the high annual purchasing spend into consideration. For example, buying directly from suppliers rather than through intermediaries, utilizing lower cost vendors, or implementing better solutions to reduce packaging costs.
Approach
ARC Consulting has acquired significant experience in the automotive sector and related industries, which puts us in a prime position to support this project. We utilized a clearly defined three-step approach:
- Diagnostics: Conduct an analysis of the overall transaction data to refine the scope and targets. Gain approval from the client’s internal stakeholders.
- Identify opportunities: Select projects, build business cases, and engage stakeholders for review and alignment.
- Implementation: Engage suppliers/affiliates, conduct competitive tenders, analyze results, and complete the negotiation and sourcing process.
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