Case Study: Strategic Procurement – Breaking Down Siloed Purchasing

Newly Merged Manufacturers Save Millions by Harmonizing Supply Chains and Adopting Strategic Procurement Best Practices

A contract manufacturer specializing in nutraceutical companies that sell protein powders and dietary supplements was acquired by a private equity firm looking to merge them with a larger, more mature manufacturer.

During the acquisition, we were brought in to assist with the operational due diligence and discovered several costs savings opportunities, including identifying that both entities were purchasing the same commodities, in some cases from the same suppliers, but at different prices.

Siloed purchasing and untrained resources

Growing by acquisition, a combined $250 million in revenue, the nutraceutical manufacturer had siloed purchasing teams, untrained resources, and no strategic foresight in purchasing raw materials.

In addition, the new supply chain leadership had limited bandwidth and no in-house experience to implement the change in the aggressively short-time frame expected by the private equity ownership.  

Core solutions that drove strategic procurement

To overcome the challenges surrounding their siloed purchasing, untrained resources, and lack of experience from both sides to meet the tight timeline, our team:

• Created, implemented, and trained the organization to execute a standardized set of cyclic processes for procurement, including spend analysis, category strategy planning, response analysis, renegotiation of terms, selection of new suppliers and their onboarding, and supplier management.
• Analyzed and verified cost savings results associated with the program in support of the finance and project management offices.
• Created and maintained project plans for all commodities and spend areas.

ROI wins and scalable strategic procurement

• Achieved a 5:1 ROI with annualized cost savings of $3.8 million in six months.
• Implemented commodity based RFQ’s, trained leadership on vendor negotiation techniques, and created several long-term strategic partnerships decreasing spot buys by 35%.

As a result of the successful procurement initiative, we extended our support by leading multiple new initiatives, including S&OP, shop floor optimization, and planning and production strategy.

The success of this engagement serves as a testament to the benefits of reassessing your procurement and purchasing strategies to uncover locally-sourced opportunities.

Contact us to learn how Aprio’s Operations and Supply Chain Advisory Services can help assess your strategic procurement to minimize the impact of tariffs.