Case study: Delivering Cost Savings Across Manufacturing Process and Purchasing Functions at a Steel Manufacturing Company
Introduction
The client is a manufacturer of high-quality steel products for customers in the construction, transport, engineering, energy and other industries. It has customers across 30 countries worldwide, revenues of c.$2bn and 34,000 employees. A&M was engaged to make scrap purchasing more transparent and available for analysis, to recommend optimal time and price for purchasing scrap metal and to align the incentives of scrap metal buyers with their business objectives.
A&M’s approach
- We used over 40 data sources, mainly from the client’s ERP systems to consolidate and visualise 30 months of purchasing data and employee timesheets. This enabled us to draw insights on purchasing volume and costs and productivity of employees.
- We then analysed and compared purchase prices with benchmarks and historic trends. Through visualising data from a seasonality lens, we identify spending patterns and tracked price variations to help optimise purchasing to take full advantage of low market pricing opportunities.
- We evaluated impurities on scrap metal purchases at a supplier level to improve quality and reduce cost inefficiency through adjusting pricing or fines with offending suppliers and leading to re-evaluation with poor performing suppliers.
A&M’s impact
- This activity enabled us to deliver cost savings across manufacturing process and purchasing functions with key outcomes:
- Scrap metal manufacturing process cost reduction of c.10% was identified through our supply chain data analytical approach.
- Delivered a 1% cost reduction on scrap purchasing and a simple to use analytic systems for evaluating purchasing performance.
- The Digital tool we developed was integrated with the client’s ERP system for improved functionality, ease of use and automation.
- Annualised total savings were in excess of €1m (full saving potential was not quantified as part of the project).
A&M: Leadership. Action. Results
Our professionals have both operational and advisory experience together with a proven track record in leading businesses through tough, complex situations. When traditional improvement activities are not enough, A&M’s restructuring and turnaround heritage brings fact-based, action-oriented leadership to deliver rapid results.
