A heavy industry equipment manufacturer with over $2 billion in revenue faced significant challenges in managing its procurement processes. Despite having an extensive global supplier network, the client experienced consistently rising procurement costs. They sought to identify the root causes of these increasing expenses while refining their supplier selection process to ensure better alignment with future business requirements.
High Procurement Costs
Supplier Delays
Fragmented Data
The procurement process was hindered by data being present in a staggered manner across multiple stakeholders, making it difficult to gain a consolidated view of procurement activities. Supplier selection decisions were driven primarily by cost considerations, often resulting in material delivery delays that disrupted production schedules. The client required a comprehensive solution capable of incorporating practical constraints but still capable of providing optimal procurement recommendations.
Quantzig began by collecting and transforming procurement data that was scattered across emails and various systems. This step ensured all relevant information was centralized and structured for effective analysis.
Next, a robust framework was developed to identify the root causes behind the rising procurement costs for each purchase order. By analyzing patterns and pinpointing inefficiencies, Quantzig provided actionable insights into cost drivers.
To optimize supplier selection, Quantzig designed an advanced analytical model. This model not only rationalized the supplier selection process but also accounted for lead times and the cost impact of each decision.
To address the practical challenges inherent in the procurement network, a what-if simulator was built.
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Quantzig's implementation of the advanced analytical model and framework resulted in a 12% reduction in procurement costs. The supplier selection process was rationalized, with a 30% improvement in supplier choice and purchase timing. Additionally, the what-if simulator enhanced tracking and provided valuable insights into procurement decisions, enabling better control over costs and timelines. This holistic approach contributed to streamlined procurement activities and long-term cost savings for the client.