10% saving in procurement spend

Continuous improvement in operating performance

The Issue

A major A&D international group was under pressure from shareholders to reduce costs. The international group had made significant integration savings following a recent acquisition; however, it had identified further cost reduction potential in indirect procurement.

PwC Performance Improvement Consulting was engaged to assist with identifying and securing savings.

Our Approach

We assisted the international group’s project and procurement managers to:

  • conduct and validate accurate spend analyses across operating companies
  • select suitable national and global suppliers (from Europe, the UK and the US)
  • manage the RFx processes (e.g. Requests For Information and Quotations)
  • conduct negotiations with suppliers
  • manage reverse auctions (including e-Auctions)
  • put in place compliance structures and processes to ensure savings were sustainable and could continue to grow.

We created two multidisciplinary and multinational project teams and gave them a team identity. The teams followed the full value procurement methodology and basic Six Sigma tools for opportunity assessment analyzing the total indirect spend across the international group by products and services purchased, by region and by supplier.

PwC enabled change and knowledge sharing between the two regions, ensuring the project goals were aligned to those of the business as well as ensuring a consistent level of skills transfer to the client’s team, enhancing efficiency in the approach and delivery across the international group.

The Outcome

Total global savings identified across the international group continue to grow and currently exceed 10% of targeted spend. The supplier base in the identified categories has been reduced from around 700 to 150.