Sourcing evaluation and optimization brings quick wins to a top Finnish engineering and service company

Our client is one of the world leaders’ in elevators and escalator solutions. In the first quarter of 2017, the company decided to conduct a thorough review of its R&D sourcing procedures to optimize the process and find synergies among the different production sites.

Given ARC Consulting’s expertise in sourcing, particularly in the R&D sector, both in Europe and in Asia, the client contacted us directly to help evaluate its current R&D practices in its factories in both Asia and Europe.

Engineered facade of a building

The client currently has production facilities in Finland, China, USA, and India and thousands of R&D suppliers located in several countries globally. Given the breadth of the business, there is a significant potential for this entity to manage suppliers more effectively to realize cost savings.

The company currently lacks a consistent and systemic method for managing suppliers. Sourcing documentation and process are highly fragmented among the different entities. A standard sourcing process could be established to maximize the utilization of the resources, reduce costs, and improve process efficiencies.

The task was handled in 3 steps:

  • Step 1: Data collection and analysis was conducted to better understand the current state of the R&D sourcing.
  • Step 2: Identified and circulated a standard sourcing process that utilized the best practices and performance level of the factories. Conducted in-depth interviews with department managers in the European and Chinese production sites to identify opportunities for process improvement.
  • Step 3: Formulated recommendations based on the inputs from the interviews and our professional experience.

The following actions and implementation roadmaps were recommended by ARC Consulting:

  • Strategy: Formulate a clear strategy that fits the objectives of both internal and external stakeholders, and address it efficiently to various stakeholders. Review and update the strategy regularly to ensure it is relevant and adapted to changing market conditions.
  • Process: Clearly defined processes and compliance methods were advised to the client.
  • Resources: Organize resources based on strategic importance, and manage them virtually.
  • Organization: Clarified the roles and responsibilities of the R&D and Sourcing Departments to eliminate overlap and improve efficiency.

ARC Consulting provided the client with a clear and professional overview of their current R&D sourcing, including both the actual and the assumed current practices.

  • High-level recommendations in four key areas of strategy, process, resources, and organization were proposed to the client company.
  • Streamlined operations and increased production reliability
  • Developed a repeatable model for driving global change that the client can draw upon for transformation efforts in other functions
  • Improved the organization, processes and capabilities in R&D sourcing to deliver full potential savings of more than $20 million in the first 12 months.

See more about our sourcing consulting services and our experience in the industrial goods and services sector.

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