An Interim Purchaser strengthens indirect purchasing at a medium-sized chemical company, yielding substantial cost savings across material and internal procurement expenses
An international, medium-sized chemical company in southern Germany was struggling with two challenges: the limited availability of raw materials, including packaging for sales, and the availability of indirect materials and services - especially for maintenance, repair, and operations (MRO) - resulting in extreme price increases.
As a result, the focus of the existing purchasing organization was primarily on securing the supply of raw materials and packaging, without taking commercial aspects into account. For this reason, an interim manager with industry experience was engaged with the aim of identifying and sustainably implementing improvements, particularly in indirect purchasing.
Initially, a cost analysis was carried out in collaboration with a management consultancy and an attempt was made to determine related blocks of expenditure by allocating items contained in SAP. This was successful for raw materials and packaging so that potential new suppliers could be identified and tenders initiated on this basis.
In the case of indirect materials and services, the approach was not successful due to the complexity and fragmentation of the individual expenses in collaboration with the consultancy; only a few product groups were identified and improved conditions were achieved through tenders and negotiations.
This resulted in the challenge of developing measures specifically for MRO expenditure that ensured both supply and competitive prices.
In the light of this, the interim manager and the purchasing team develop the following measures:
Analysis and intensive coordination with the specialist functions led to numerous measures and their application in the processes, including:
Cost reductions in the double-digit percentage range were achieved, for example with forklift trucks, engineering service providers and cylinder gas. The establishment of catalogs for recurring requirements and the bundling of all non-manufacturer-specific technical parts not only lowered material costs but also considerably simplified internal processes and significantly reduced internal procurement costs in the long term.