Cost optimisation and category management | KPMG | CN
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Cost optimisation and category management

Cost optimisation and category management

We helped a global leading supplier of the automotive industry to reduce procurement cost.

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Client A global leading tier 1 supplier in automotive industry
Sector Industrial market and manufacturing
Project Cost optimisation and category management

Client challenge

After an integration of a German tier 1 automotive supplier, our Chinese client wanted to realise cost savings for their global plants based on direct and indirect procurement cost reduction. In addition a worldwide central led organisation with defined strategy, clear processes, qualified employees, e-sourcing tools, reporting tools, guidelines etc. should be set-up to maintain the achieved savings level.

optimisation challenges

Key activities

  • In phase 1 of the project, KPMG created a global spend transparency and identified cost saving opportunities based on value lever workshops with cross-function teams in the client main plants. Savings initiatives have been planned including next steps, timeline and responsibilities. In addition the procurement maturity level covering processes, tools, skill level and methods of the client was assessed. After identifying the major gaps and actions to close those gaps, a roadmap of improvement has been created for the client.
  • In phase 2 of the project which took 20 months, KPMG implemented the identified cost saving initiatives. This included a quick win phase, focusing on negotiations with key suppliers per category supported by benchmark data and should cost calculations. Wave 2 and wave 3 of cost savings included initiatives with internal or external process changes, VA/VE methods, or supplier changes. Categories implemented: aluminium die casting, sheet metal, stamping, cold forming, outsourced labour, adhesives, MRO, logistics, maintenance, IT equipment etc.
  • In addition a best-in-class target operating model for the client has been designed and implemented: A new more centralised organisation structure got created, roles and responsibilities have been defined, training of employees conducted, category management improved and processes have been adapted.
  • A procurement IT tool was tendered and implemented globally.
transparency optimisation

Outcomes

  • Savings represents an increase of 1 EBIT %.
  • 55 initiatives were implemented and cost savings of 3.9% of total spend has been achieved.
  • A blueprint of the future organisation was designed based on the assessment result and the strategy target of the company. Based on the blueprint, a new Procurement Operating model has been implemented with a new organisation chart, process framework and procurement strategy.
savings

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