A leading global producer of automated warehouse systems with $ 135 million in annual revenue was witnessing rapid growth of 60-120% year by year.
A tremendous growth gave opportunities to optimize costs but limited AutoStore's capacity to work strategically with procurement.
Additionally, the company struggled to achieve spend visibility to uncover intelligent insights and tap into saving opportunities.
As a result, AutoStore developed a need to drive procurement and savings transformation program to handle this growth properly.
In a bid to achieve these goals and scale their business for continued growth, AutoStore began looking for the right partner and, in 2018, engaged Ignite Procurement.
It began with understanding AutoStore's expectations and goals. AutoStore transferred the knowledge about their suppliers, products, and situation to Ignite. This information set the background for identifying both quick wins and longer-term opportunities as per AutoStore's needs.
The AutoStore procurement transformation program consisted of the following steps:
- Collect, consolidate, and analyze spend data in Ignite Procurement
- Prioritize savings initiatives based on impact and ease of implementation
- Identify relevant suppliers and conduct in-depth supplier analysis
- Provide a library of dashboard analysis and an ability to follow the most relevant KPIs continuously
- Connect spend data with aluminum prices (one of the key raw materials for AutoStore) and financials to identify opportunities
- Continuously track spend and savings through Ignite
The AutoStore procurement transformation program consisted of 3 key modules: Fund the journey, Form strategic partnerships, and build organizations and processes for procurement excellence. This quickly translated to a number of significant benefits, including:
- 21 renegotiations with key suppliers resulted in 5.5% savings and improved NWC (Net Working Capital)
- Improved payment time from 42 to 54 days resulting in a one-time effect of ~$2M
- 16.5x procurement ROI in initial few months
- Significantly greater spend transparency and a more strategic approach to negotiations
- New payment terms introduced with some suppliers the savings from which will be realized on an ongoing basis
- Increased visibility into various drivers of costs
- Infrastructure to ensure identification and sustainability of further savings and improvements in the future