Procurement Excellence

Cost and innovation pressure is often reflected in procurement. Companies are forced to set up procurement organizations or to align their procurement practices towards the growing demands. We help companies to ensure that procurement is optimized successfully.

Challenges and trends

Cost and innovation pressure is rising across industries. This pressure is often reflected in procurement, which must reduce costs while at the same time providing innovative products. Companies are being forced to align their procurement practices toward these growing demand.

The new Purchasing Excellenc study examines key trends and benchmarks in the purchasing of production and non-production-related materials and services. The study identifies 15 key purchasing trends:

Procurement units must find the right response to each of these trends. To ensure that procurement is optimized successfully, companies with a good strategic setup consider three factors:

• First, procurement and other areas should pull together and strive for the same targets.
• Second, steps taken must also ensure that costs are reduced in a lasting manner.
• Finally, actions must be fully implemented and their success monitored.

The Roland Berger procurement framework has three levels:

1. Procurement strategy – Links procurement initiatives to the company's strategy and requirements and provides clear guidance on expectations and performance improvement targets
2. Procurement performance – Covers all aspects of value creation, including long-term realization of savings, leading service levels, and efficient capital structure
3. Procurement enablers – Ensure the sustainability of performance improvements

Roland Berger Strategy Consultants provides standardized approaches that are customized to each customers' needs. The approaches include benchmarking, comprehensive cost reduction, low-cost country sourcing, systematic commodity management, as well as optimal supplier, organization and process development.

Benchmarking and organizational development

A global automotive OEM asked us to assess the procurement practices of its main global competitors. We identified current trends in procurement and made recommendations on how to achieve benchmark levels within two years.

We conducted an in-depth benchmarking study of all key areas and developed recommendations with the client on how to move ahead of the competition and develop the best possible procurement organization, helping the client to reach benchmark levels within the targeted timeframe.

Reducing material costs

A global aerospace OEM asked us to improve procurement. We reviewed top supplier contracts for ongoing and future business and aimed to realize net savings of EUR 270 m (11%).

A cross-functional team conducted a comprehensive cost reduction program and set up a quality gate process with clear savings rules. We then validated savings ideas, and a monitoring committee supported implementation.
More than EUR 190 million in net savings were realized in the first 18 months of the program. What's more, supplier roadmaps have been defined and development programs launched for key suppliers.

Developing the organization

A global automotive OEM asked us to globalize its non-production material (NPM) procurement practices. The aim was to develop best-in-class procurement practices to realize global process synergies and savings of USD 140 million.

We conducted a benchmarking study, assessed gaps with the client and identified necessary improvements. As a result, a clearly defined global NPM organization has been developed, as has a structured approach to generating savings. The savings target has since been consistently overachieved and the organization is now recognized as an innovative role model for OEMs.