Unlocking Procurement Excellence: A Success Story with an Industrial Goods Manufacturer

In today’s competitive landscape, the difference between industry leaders and laggards often comes down to one critical factor: strategic procurement. When a global leader in wood products manufacturing faced urgent cost optimization challenges, they turned to INVERTO for innovative solutions to redefine their procurement strategy. This partnership transformed their procurement function, demonstrating how a well-crafted strategy can not only streamline operations but also drive substantial growth and sustainability.?

Discover how this collaboration reshaped procurement practices, leading to impressive savings and laying the foundation for long-term success. This case study reveals the power of strategic procurement in action and how tailored solutions can elevate an industry leader to new heights.??

Navigating Challenges: Limited Resources, Supplier Power, and Reactiveness in Spend Management?

Following a significant company-wide restructuring, the client’s procurement team experienced a substantial reduction in headcount. This shift necessitated a focus on tactical solutions to maintain uninterrupted supply during the transition. The project uncovered several critical issues: the absence of a category strategy, limited data transparency, over-reliance on single-source suppliers, lengthy supplier qualification processes, and decreased production volumes. Despite considerable efforts to enhance operations, opportunities remained to further optimize spending, mitigate risks, and secure a sustainable supply chain for the future.?

A Proven Path to Success?

Three non-negotiable goals were established to address these challenges:?

1. Optimize procurement costs across both direct and indirect categories, targeting at least 5% savings on addressable spend.?

2. Ensure savings sustainability over a 3-year period.?

3. Cultivate a continuous improvement and resilience mindset within the organization.?

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The project was executed in three strategic phases:?

1. Opportunity Assessment (1 month): Analyzing overall spend, identifying key improvement categories, and developing a comprehensive action plan for realizing savings over the next 3 years.?

2. Implementation (6 months): Achieving savings across prioritized categories, applying procurement best practices, and deploying risk mitigation strategies to safeguard supply in both the short and medium term.?

3. Handover (1 month): Delivering all developed tools, establishing robust governance structures, and providing strategic training to enhance team capabilities.?

Central to the success was INVERTO’s co-sourcing strategy. Acting as an extension of the client’s team, INVERTO offered on-site, hands-on support, seamlessly integrating into existing operations. This collaborative approach enabled effective management of direct and indirect spend through strategic negotiations, RFQs, demand management, and the implementation of a Control Tower to regain procurement control. The strategic category work involved 24 initiatives across more than 7 categories—such as direct materials, wood operations, logistics, MRO, and professional services—culminating in frame agreements with over 25 suppliers to secure supply, de-risk the supply chain, and achieve savings.?

Fostering Sustainable Impact?

The final phase focused on governance and sustainability. An external PMO was introduced to bolster the procurement organization and ensure ongoing value generation. Additionally, 20 new initiatives were identified for 2025 and 2026, reinforcing an optimization mindset and setting clear expectations for the future. Strategic contracts with key suppliers were established to secure supply, and all commercial conditions were negotiated to ensure the sustainability of savings. Furthermore, all tools, reports, and templates used during the engagement were standardized and handed over to support future efforts and streamline day-to-day operations.?

To ensure future replication of the implemented strategies, three strategic training sessions were delivered covering negotiations, category strategy development, and analytics. These sessions equipped the team with essential skills, knowledge, and resources to sustain and build on the project’s achievements, embedding a culture of continuous improvement and resilience.??

Delivering Impact

The project achieved notable outcomes across six key dimensions:?

1. Cost Savings: Project impact projected to achieve 8% savings over addressable spend through 2026, with approximately 60% of the savings realized in 2024.?

2. Sustainability and Compliance: Collaborated with legal teams to create 6 strategic contract templates and secured contracts with 26 suppliers, covering 52% of total spend and securing supply of critical components and services for at least 24 months.?

3. PMO Integration: A PMO was integrated to monitor ongoing initiatives, track the pipeline, and minimize savings leakage.?

4. Future Pipeline: Defined initiatives for 2025 and 2026, estimating an additional impact of over €2 million, validated by the client’s operational and controlling teams.?

5. Continuous Improvement: Fostered a mindset dedicated to delivering savings and identifying further opportunities across all daily operations.?

6. Tools, Processes, and Reports: Created and incorporated more than 20 processes, templates, tools, and reports to ensure sustainability of savings and best practices.?

This project not only optimized procurement costs but also ensured long-term operational stability and resilience for the business. The concerted efforts have empowered the client to achieve significant savings and nurture a culture of continuous improvement, positioning them for sustained success in a competitive marketplace.??