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Supplier Consolidation

Client:

Multinational Corporation with $15 Billion in annual sales and operations in 54 countries

Problem:

Client had a significant global spend on lab supplies and was purchasing through numerous suppliers for similar products. Over the years, end users had grown accustomed to the “status quo” and regional bias had led to fragmented sourcing. Additionally, multiple acquisitions were completed and the suppliers remained intact with these new additions. In many cases, there was virtually no purchasing agreement in place with the suppliers being utilized.

The fragmented category presented a unique challenge. The Client wanted to bring clarity to their program, simplify their spend, and cut costs through a more targeted approach. The goal was to strategically reposition their lab supply program and take advantage of their significant purchasing power. Adding to the challenge, Procurement Executives desired an accelerated Return on Investment and requested an expedited solution.

Solution:

Based on the goals and objectives laid out by the Client, CenterPoint devised a detailed project roadmap. CenterPoint began with the complex task of data gathering from the various suppliers and the Client. Upon collection, the data was pooled and normalized in order to begin the task of simplifying and consolidating. Once completed, data was fed through our proprietary database and reviewed by our category experts. After careful analysis, the Client was presented with several optimization models that would consolidate the supply base, capture maximum savings and do so with a minimal time commitment. Satisfying our Client’s goal of a speedy execution, CenterPoint completed this difficult analysis in less than 75 days.

Results:

Supplier base was consolidated from 7 to 2. Total spend with the chosen preferred supplier grew from 38% to 85% of total spend. As a result of our efforts, uniform terms, conditions, and pricing were secured for their lab supply program. Consequently, the optimized program also benefited from a larger than expected cost reduction. Going forward, the Client experienced greater visibility and sustainability of pricing and was fully satisfied with the outcome of this strategic sourcing initiative.

Metrics:

  • Pre – CenterPoint Lab Spending: $12.0 Million
  • Post – CenterPoint Optimization Spending: $8.2 Million
  • Savings: $3.8 Million (31.7%)

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