Client Profile

$38 B provider of technology and service solutions for the energy sector.

Strategy & Objectives

    • Re-establish control of strategic commodity category: Nickel and Alloy Bar material.
    • Aggregate demand and consolidate spend.
    • Leverage volume with raw material sources.
    • Control & isolate material input value in part cost model.
    • Ensure continuous supply of material to the network.
    • Consolidate and centralize supply with a designated 3PL service and distribution provider.
    • Sponsor a Rebate (Directed Buy) sourcing program for Nickel and Alloy Bar material.

Solution

SDX™ 8.0 Multi-Enterprise Platform with the Extended Bill of Resources loaded for the population of parts produced from Nickel and Alloy Bar.  With this model in place, The Supply Network included the OEM (Network Sponsor), 40 + Part Suppliers (Contract Manufacturers), a Distributor, and 5 Material Sources (Primary Metals Producers).  The OEM, in collaboration with the designated Distributor, were able to:

    1. Aggregate network demand and consolidate spend for Nickel and Alloy Bar requirements.
    2. Share that demand and negotiate preferred pricing including volume rebates with a select group of material producers.
    3. Direct part suppliers to single source (ePL) and provide preferential material pricing.
    4. Monitor program performance and collect rebate for transacted volume.

Results

    • Avg. 14 percent recurring cost reduction on raw materials.
    • Eliminated finished part price variability by isolating cost of materials and locking in finished part cost with suppliers.
    • Improved planning performance for entire supply network
    • Less speculative and obsolete inventory throughout the supply network
    • Proactive expediting of the timely purchase of material by sub-tier suppliers

Client Profile

A multi-billion dollar market leader in the fastener distribution business furnishing nuts, bolts, inserts and other fastening systems to customers worldwide.

Results

In under 6 months, Supply Dynamics enabled this customer to progress from simply knowing the part number and piece price of the fasteners they distribute to fully comprehending what it takes to buy the raw material, fabricate and assemble the parts it distributes.   Equipped with this information, this customer can now manage over $100M in annual spend by consolidating suppliers, eliminating noncompetitive sources of supply, monitoring and directing the competitive sourcing of common materials and eliminating sole sources of supply.  Moreover, the visibility provided by Supply Dynamics allows this customer to negotiate more effectively with new and incumbent sources of supply. Coupled with Supply Dynamics SDX™ 8.0 Platform  the customer will be able to ensure the data remains current through product life cycles, design changes and supplier transitions.

Client Profile

A $13.5 billion transportation industry market leader and has 14 top-tier suppliers for fabricated parts and assemblies.

Results

Although this company’s strategic sourcing processes have long been considered a benchmark for the industry, Material Demand Aggregation achieved a significant reduction in the cost of nickel and cobalt sheet metal products. The process minimized speculative inventory and developed second source suppliers for previously sole-sourced materials. In addition, on-time finished-part delivery and material utilization were dramatically impacted throughout the supply chain. This same client also had 26 top-tier machined-parts suppliers purchasing fastener items from 65 different sources. By reducing the number of sources from 65 to only 3, Supply Dynamics was able to achieve lower step-down pricing for 3 years, while eliminating all minimum quantity purchase requirements. Simultaneously, Supply Dynamics was able to assist the OEM in developing and approving new sources for dozens of previously sole-sources fastener items.

Client Profile

A $1.6 billion European engineering company.

Results

In a highly escalatory, capacity-constrained environment, Material Demand Aggregation allowed this company to:

  • Achieve dramatic cost reductions and secure a reliable, qualified source of supply for stainless steel alloy bar products in 2004 and 2005.
  • “Piggy back” 17 major sub-tier suppliers on the OEM stainless steel alloy bar program referenced above.
  • Dramatically reduce the annual cost of fastener purchases across 10,000 part numbers and extend vendor managed inventory service levels to more than 18 OEM sites worldwide.