A large metals and mining conglomerate with multiple plants located acrosscentral India. The client operates in the Metals and Mining sector with afocus on vendor consolidation, annual rate contracts (ARC), and outsourcedprocurement. Their primary procurement category is Maintenance, Repair,and Operations (MRO), utilizing the Mozart Vendor Management System(VMS).
The Challenge
Streamlining Indirect Procurement The client struggled withmanaging and optimizing their indirect procurement processes,which involved numerous small-value, high-frequency transactions.
Consolidating Long-Tail Vendor Base The client had a vastnumber of small suppliers, leading to inefficiencies and increased management overhead.
Cost Savings on Long-Tail Procurement The dispersed vendorbase made it challenging to achieve significant cost savings on thelong tail of procurement.
Bandwidth Savings for the Procurement Team The procurement team was over burdened with the management of numerous suppliers and transactions, limiting their ability to focus onstrategic initiatives.
Strategy and Approach
ShakeDeal's Intervention
Identification of Savings Opportunities ShakeDeal collaborated with the client to analyze their indirect spend and identify potentialsavings opportunities. This involved a detailed spend analysis to highlight areas where costs could be reduced.
Negotiation and Rate Contracts ShakeDeal negotiated andsecured annual rate contracts in various MRO categories, such asconsumables, spares, and electricals. This provided the client withsavings of up to 5%.
Vendor Consolidation ShakeDeal implemented a strategy to consolidate the client's spend across their long tail of vendors. This resulted in a 60-80% rationalization of their vendor base, significantly reducing the number of suppliers the client needed to manage
Implementation of Mozart VMS ShakeDeal rolled out the Mozart Vendor Management System, which automated the procurement workflow for long-tail vendors. This system provided transparency and visibility into order statuses, shipment tracking, and vendor payouts, freeing up the procurement team's bandwidth for more strategic tasks.
Outsourced Procurement for Other Categories For categories not covered by the rate contracts, ShakeDeal acted as an outsourced procurement partner, offering a Procurement as a Service (PaaS)function. This allowed the client to offload the operational aspects of procurement and focus on core business activities.
Results
Cost Savings The implementation of annual rate contracts and vendor consolidation led to significant cost savings. The client achieved up to 5% savings on MRO categories and further savings from reduced management overhead.
Efficiency Gains The rationalization of the vendor base and thedeployment of Mozart VMS streamlined the procurement process,leading to substantial efficiency gains. The procurement team couldnow manage their workload more effectively and focus on strategic procurement activities.
Increased Transparency The Mozart VMS provided the client withreal-time insights into procurement activities, order statuses, andvendor performance, enhancing transparency and control over the procurement process.
Strategic Focus With ShakeDeal handling the operational aspects of procurement, the client’s procurement team was able toconcentrate on strategic initiatives, such as supplier relationship management and long-term planning.
Conclusion
The collaboration between ShakeDeal and the large metals and miningconglomerate exemplifies how strategic vendor consolidation, the use ofadvanced VMS technology, and outsourced procurement services canovercome common procurement challenges. By identifying savingsopportunities, negotiating rate contracts, and streamlining procurementprocesses, the client not only achieved significant cost savings but alsoenhanced the efficiency and effectiveness of their procurement team. Thiscase highlights the importance of leveraging technology and strategicpartnerships in optimizing procurement operations in the metals andmining sector.
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