How a global manufacturer unlocked cost savings and more through strategic sourcing

Owned by a leading private equity firm, our packaging manufacturer client was under pressure to improve its bottom line. For this company, strategic sourcing was the answer. Through the transition process, our client discovered how procurement optimization is a catalyst for further value beyond cost savings.

Cost reduction is challenging in any environment, but particularly so in industries like packaging, where organizations face inflationary pressures, regulatory compliance requirements, and rising sustainability demands from consumers. On top of this, our client grappled with the additional complexities that come with being a multinational entity spread across 15+ countries and 40+ sites. 

Recognizing the need for a more effective approach to cost saving and addressing operational complexities, the client turned to Efficio for support. Partnering with Efficio brought a blend of local, specialized procurement expertise and language capabilities, giving our client the extra edge to fast-track their strategic sourcing programme. 

Without transparency, there is no opportunity

Like many organizations with a global footprint, each of the client’s manufacturing sites were using different systems to manage their data, and data classification methods were often incompatible. Furthermore, some datasets were outdated, meaning available data required validation for relevance and accuracy.

Greater data transparency was a crucial next step for the business to identify opportunities and develop strategies that could unlock value across its global locations. A key driver of success was the close collaboration between stakeholders, ranging from procurement leads to plant managers to Efficio’s experts. This meant collectively developing strategies, tender documents, and implementation roadmaps, with regular meetings to help reach agreements, communicate key changes, and present recommendations and benefits to relevant parties. The result: the plethora of Excel sheets, buying pipelines, price lists, and contracts were streamlined into a single, centralized initiative management tool.

New attitudes, new skills, new opportunities

During the project, it became clear that going out to tender could help the business unearth new opportunities. However, a fear of damaging relationships, combined with complexities around navigating compliance, meant there was hesitation within the client’s business to challenge long-standing suppliers.

Working closely with Efficio, the business moved to shift attitudes. Leadership delivered targeted communication to stakeholders on why an updated approach was needed. They created platforms to openly discuss concerns, propose solutions, and present concrete steps to mitigate risks. Efficio’s experts also delivered tailored training sessions to empower the procurement team with a deeper understanding of the supplier market and a strategic approach to supplier relationship management.

This cultural and skillset shift enabled the client team to identify alternative suppliers, which led to the discovery that many incumbents were willing to match competitor prices, ultimately driving a much stronger price offering. Combined with the increased visibility, this examination of the supply base helped streamline and reduce the supply base by 25%, simplifying supplier management. 

Digitising to unlock the power of people

“The big surprise for clients is often the savings that come from a strategic sourcing approach,” says Efficio Principal Adi Bijedic. “But sometimes the biggest surprise comes from discovering the full benefits beyond cost savings.”

For this client, a big surprise was the impact of digitization.

Left without automation, administrative tasks would have continued to eat up a significant portion of the Procurement teams’ time. The client-Efficio team evaluated how existing tools could be leveraged most effectively and what gaps needed filling. By selecting and effectively utilising the right tools, the client team opened up a greater capacity to focus on high-value-add topics. Checking invoices was replaced by identifying opportunities for cross-functional collaboration; manually pushing through purchase orders turned into conducting in-depth supply market research place of.

Another key part of the digitisation process was ensuring the client team could fully take over the tools. Following hands-on training, the client team continues to manage the tools, with Efficio’s experts available to support as needed.
Altogether, the renewed, strategic approach to sourcing – including increased data transparency, an updated approach to supplier relationship management, and digitisation, among other factors – enabled the business to drive annualized cost savings of 9%. 

Delivering value beyond cost savings

Up to 90% of an organization’s carbon footprint originates from its supply chain, and yet businesses often underutilize Procurement as a lever to drive their sustainability agendas. Using our CarbonCube® tool, the team leveraged its procurement spend data to calculate the business’ carbon emissions. This activated opportunities for other business areas, such as Sales and Marketing, to use the business’ sustainability data as a competitive advantage. 

The sustainability initiatives were key to propelling the wider business to recognise Procurement as a strategic partner, not only as a driver of cost savings but also as a generator of far-reaching value across the business.