The four operating units of an international group of companies in Germany, South Africa, Ireland and the UK acted independently. This resulted in long delivery times, high safety stocks, low cost transparency, rising material costs and high purchase obligations for long-running parts. There was a complete lack of uniform standards and strategies. The interim manager was commissioned to significantly reduce costs. The project objective was to save three million euros with a global purchasing strategy and reduce the material ratio by 60 percent.
Concept for globally uniform framework agreements and purchasing conditions developed
After collecting the necessary data, the interim manager analyzed processes and activity structures in the first phase. He then formed cost blocks for the areas that were to form the future focus. After an initial workshop with the organizations and those responsible in South Africa, Ireland, the UK and Germany, he drew up an initial target concept. After approval by the management, he modified the concept in bi-weekly meetings on site or in video conferences. The concept envisaged that the framework agreements and purchasing conditions would be standardized globally and that the number of suppliers would be reduced to less than 400.
New lead buyer concept agreed and implemented with business units
This required a new lead buyer structure. To determine and implement the details, the interim manager negotiated on site in the operating units. In order to implement the lead buyer concept, all suppliers were combined into so-called functional assemblies. With the new concept, each functional assembly is managed globally by a lead buyer. As the lead buyer is also responsible for results, he determines the assembly strategy. He renegotiates the global framework agreements ("strategist and negotiator") and coordinates all activities in his assembly group ("caretaker"). He also makes "make or buy" decisions and builds up strategic suppliers.
Costs for materials successfully reduced by three million euros
The new lead buyer concept has resulted in a clear allocation of responsibilities. There are now clear purchasing strategies for all assemblies. The concept enabled material costs to be reduced by 40 percent and the targeted three million euros to be saved.
The interim manager also had to overcome resistance during implementation. In particular, his presence in the subsidiaries and his clear negotiation skills contributed to a better mutual understanding - and to the fact that everyone involved ultimately supported the global purchasing strategy.
