Case study - Procurement Optimisation
We worked with an Australian mining concern to rationalise its procurement systems, policies and processes.
As a result of this work we were able to help generate for this client actual annualised savings of over $28 million, with a further $12 million of savings identified for future targeting.
Sustainability is key to successful procurement optimisation and a core principle on which we base our work. To date the total available savings from this particular optimisation program have exceeded $100 million.
This was generated from a base procurement spend of $330m a year across multiple categories, some of which were critical services and highly specialised materials
Northern Edge was part of a working partnership of management consultants and operational procurement specialists.
We worked with an initial list of more than 200 suppliers to introduce the procurement optimisation initiative and to secure their participation in the process. With such a large and diverse group of suppliers, many providing ‘mission critical’ plant, equipment and services to our client, it was crucial that this initial introduction phase was conducted with sensitivity, tact and diplomacy.
We went on to lead 400 supplier meetings across three rounds of pricing negotiations. This enabled us to identify and realise significant synergies and efficiencies across 23,000 parts and 160 service categories, ultimately with the result that we were able to consolidate our client’s supplier list from the original 200 to just 83.
We managed interaction throughout with the client’s evaluation team, and we provided data analysis to support the project and demonstrate effectiveness.
We also evaluated and implemented for the client an online supplier portal, and trained client staff in ongoing maintenance and operation.
This project demonstrated our ability to manage and deliver significant results for complex, international projects, with fragmented and established procurement environments. It also proved our ability to quickly understand the intricacies of existing, complicated procurement landscapes and manage vested interests to the point where efficiencies can be identified, negotiated and delivered.