• Case Studies

    Strategic Sourcing and Multi Tiered Inventory Processes

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A strategic sourcing review was completed, enabling a reduction in purchasing staff, improvement in operations and a cost saving of 14 to 22% across key categories

The Background

  • 100+ suppliers being called upon by 16 different supply groups based on very localised personal motivators
  • Above the market pricing being paid with unreliable and poor logistics; coordination with managed supply, typically direct to sites across QLD, TAS and WA
  • Little managed purchasing leverage and indifferent accounts payable process
  • Non-labour spend averaged about $400mpa

How the Siecap team helped

  • Tendered to very wide market for innovative approaches to reduce purchase prices and supply system costs. Settled on 14 suppliers for non-OEM non-critical production spares
  • Established all supply agreements with various forms of purchasing automation
  • Introduced life cycle cost considerations and fixed hourly costs as key determinants in tenders for primary production equipment procurement

Results

  • Purchasing staff reduced from 16 to 6, increasing productivity from 500 order lines per month to more than 4500 per month. Warehouse throughput increased from $500k per week to $2.5M per day
  • Purchase savings ranged from 14% to 22% depending on the category. Process savings reflected in reduction of inventory from $13.5M to $8.5m, overall staff reduced from 42 to 29 and two largest sites achieved OTSDP (fill rate) at the site of 99%

Case Studies