Sourcing Case Study
Sourcing Case Study
Corrugated Case Study
SBG was contracted to assist in the analysis and strategic negotiations with a large consumer goods distribution company that had been with their local box company since 1999. The client indicated they had checked the market every couple years and felt they were getting the most competitive cost they could achieve. SBG collected their data and ran the SKU’s through our proprietary analytics and identified an opportunity well into double digit savings percentages.
SBG conducted a review with the client to understand the historical relationship between their incumbent as well as service level aspects that were necessary to operate their facility with respect to corrugated. SBG constructed a formal communication to their incumbent that created a competitive situation, explained why a revised cost structure was being asked and provided a document with target prices by item.
Throughout the process, our client sent us email communications as they occurred so we could coach our client how to respond. After each phone conversation with the supplier, the client would call SBG to discuss the conversations and reformulate a response. When prices were submitted, SBG conducted the analysis and provided analytics support to show where pricing was inconsistent and constructed formal responses for our client to send to the supplier. In two short weeks, the incumbent ultimately agreed to a reduction just short of 20% and a formal price change mechanism, which the client didn’t have before.
Ingredients Case Study
SBG was hired by a multi-billion dollar food processor to help understand their current costs for their corn based ingredient category and assist in negotiating the contract. With our proprietary technology, we analyzed 3 years of historical data and showed how the cost structure has continually increased inconsistently with the raw materials.
SBG conducted a thorough analysis on the historical method the client deployed to negotiate the category and the progression of the relationships with the suppliers. We know there is more to the strategy than just purely numbers and we factor these aspects into the deployment of the overall approach. With our guidance and analytics, our client started the negotiations early in the contracting season and after just a few rounds of pricing submittals, our client was able to reduce their costs by over 15% without making a supplier change!
Not only were we successful in reducing our client’s costs, we avoided an increase that was announce in the market. This initiative proved to be very successful for our client and their bottom line financials. We know what cost structure our clients can achieve based on their category characteristics and we know how to get them to those costs which is the key to our success.
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