$40 Million Saved in Just 7 Months on a $500 Million Supply Chain Spend

Situation

Company is experiencing meteoric growth without a system of processes and procedures to provide predictability and consistency. MetaExpert engaged with a San Francisco based Start-Up Energy & Renewable solutions provider with a $500M spend.

This firm needed assistance to improve Supply Chain performance in the areas of Agility, Cost and Asset Management Efficiency.

Actions

The MetaExpert engaged in a top-down analysis to fully understand the spend which was 100% outsourced and of that 90% was outsourced overseas.

The Procurement Professional benchmarked the costs and provided an "entitlement" Cost and found the current costs were 20% higher than comparative high precision components.  The procurement team sourced the international network of metal subcontractors and sent out an RFQ to test the marketplace.  We qualified each recipient using 7S methodologies and awaited the pricing responses.

Results

After receipt of all the proposals, short listing those partners and negotiating firm fixed costs, the company realized a reduction of $40.1M but more importantly built a continuous pipeline of savings which provided an additional $12.5M on subsequent sub-assemblies.

Return on Investment

This firm measured Cost per Kilowatt and this effort would achieve significant upside for this fledgling organization.  A Return on Investment of 3400% was realized with another $12.5M more to save on sub-assemblies.

Project Details

MetaExpert identified skills: When first engaging with the client we realized they did not have a strong procurement team that owned the process.  We right sized the vendor base and eliminated the underperforming and provided a clear path for them to succeed without our intervention.

Contract Length: Six (6) months with a one month extension

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