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| Mining Major – rapid sourcing results |
Context / Scope of project
Our client was a first quartile mining asset with a large multinational resource company that had seen its cost base increase significantly in the last few years. Although there were recent sourcing savings we were engaged to build on these and build the procurement team’s capabilities. Two thirds of the cost base was excluded from our focus leaving $105m to be targeted. The excluded suppliers were either globally controlled, recently signed, royalties, or currently being strategically negotiated.
Client achieved:
- $4.8m in savings achieved in 12 weeks over three areas:
- $2.3m in savings from rapid sourcing work
- $1.7m in supplier optimisation
- $0.8m in negotiated benefits as part of tender process.
- Tackled $105m of spend
- Substantive improvements in terms for a strategic contract that will ensure delivery of a key service, where the client had experienced significant issues in the past
- Changed the way the supply team did business- negotiation skills, strategic sourcing.
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What we did:
The work was lead by a PIP manager with support from a client and PIP team that reported jointly to the Finance and General Managers. The team undertook the following:
- Assessment of spend to determine which suppliers to targeted as part of the rapid sourcing program. Strategic suppliers were excluded, as were suppliers where contracts had been recently negotiated or would soon be tendered
- Developed internal communications pack and refined assessment of suppliers with key site stakeholders
- Developed communication pack for suppliers that created a compelling case for suppliers to provide savings.
- Sent 105 letters to suppliers, then as follow up conducted 53 negotiations in conjunction with the client’s supply team with suppliers
- Conducted 18 negotiations with suppliers where the tender process was underway independently of the rapid sourcing project
- Completed files notes and saving forms for each supplier to facilitate ongoing relationship and lock in savings achieved
- Worked with site stakeholders to identify opportunities to consolidate and optimise suppliers in order to take advantage of the best value suppliers. Implementation plans were developed and signed-off to support these ideas.
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