Benchmarks & Client Cases
Profitability Increase
in Food & Beverage Industry
The Challenge
Problem
• Poor quality suppliers: low service level, low OTIF and high defect rates
• Frequent stockout of critical raw materials, affecting production
• "Supplier dictates the rules" - limited leverage for negotiation
• Uncontrolled stock of raw materials and subsidiaries
Root Causes
• Different contract conditions for each supplier
• Strategic suppliers not identified
• Purchase of commodities not standardised
• No repercussions for suppliers who fail with service level agreements
The Solution
• Definition of strategic partnership model approach
• Contract renegotiation based on standard contract model designed for each supplier category
• Definition of alternative suppliers for critical materials
• VAVE Projects: Value Analysis Value Engineering in order to identify opportunities to reduce complexity and/or quantity of materials
• Process Design to reduce the Lead Time of the material approval process
The Results
The project had a payback period of 6 months with annual savings in excess of 1.6 million €.
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