Helping Manufacturing Companies Cut Costs

Manufacturing companies continue to identify ways to cut costs and work with their internal procurement department with services that include category management, strategic sourcing, contract negotiations, etc. but there is still pressure on procurement departments to find more ways to cut their bottom line.

In most cases, the manufacturing company's procurement department has already sourced categories including office supplies, facility maintenance, and MRO. Now that they have programs in place, procurement teams need to identify ways to apply strategy to their current methods to continue to save money, but they are struggling with developing that strategy. They could be struggling for various reasons, for example, the procurement team is lean and time bankrupt, so they really do not have the bandwidth to develop strategy; their access to market research could be limited; or they do not have the category expertise in all the categories that they need to evaluate for savings. Another challenge for many manufacturing companies is that, once a cost savings program is in place, tracking compliance and documenting savings across multiple plants can be time consuming and cumbersome.

In my own work with manufacturing clients across the industrial landscape as part of Source One, our clients have almost unanimously, appreciated the resources and expertise we bring to help them develop the strategies necessary to continue savings and curate process efficiencies. They also have expressed appreciation for our unparalleled market intelligence and subject matter expertise, which we apply to develop short-term and long-term savings strategies. Additionally, those clients with multiple, geographically diverse locations routinely request our help to collect and normalize data across the entire organization, and then market their savings reports so that the entire company is aware of the savings policies that are in place. I also routinely see that many procurement departments of manufacturers are not as involved as they should be (or want to be) with sourcing projects in categories such as Human Resources, IT & Telecommunications, Marketing, and Finance. The sourcing and savings strategy within these categories tend to stay within their department. What we notice is that many of these department stakeholders have built long-standing relationships with their suppliers. This makes them more sensitive to allowing the procurement department access to these suppliers and their current scope of work. This can happen when stakeholders fear that procurement does not understand the category to the extent that they do, or that procurement will only focus on price and not the quality or value that the supplier brings to the company. In your own sourcing, when you are looking to identify ways to cut costs, it is really important to collaborate with these stakeholders in these areas and make sure that you are aligned with their current goals and objectives.

At Source One, we can provide you with the market intelligence and strategy you need to develop your internal sourcing strategies and practices, and to work with the stakeholders to build relationships between your team and the stakeholder. Gaining that internal buy-in will help you get results faster and in most cases those results are with their current supplier. On average, our clients remain with their current supplier 90% of the time. By leveraging Source One's market intelligence, we work wit the incumbent supplier to ensure your company is receiving best in class pricing for services that are currently meeting or exceeding your company's requirements.