SITUATION

Following the acquisition of a domestic goods manufacturing organization, a Private Equity firm engaged OnDemand to deliver manufacturing network and strategic sourcing improvements that were identified during the due diligence process.

Additionally, the management shared a belief that the newly acquired business’s procurement organization was underperforming and tasked OnDemand with reviewing and restructuring the team to optimize performance.

SOLUTION

OnDemand worked with the target organization to implement several changes to its manufacturing infrastructure. Our team drove the shift of production from high cost domestic facilities to lower cost near shore factories. This move reduced production costs and also drastically cut transportation expenditure.

Our second area of focus was on renegotiating contracts and shipping terms with the organization’s strategic plastics suppliers in China. These negotiations meant the supply of critical parts was more reliable and more cost effective than in the past.

Lastly, OnDemand’s team carried out a detailed strategic review of the organization’s procurement team. This review provided an understanding of the skills shortages present within the procurement department and suggested a number of strategic hires be made. OnDemand facilitated training for the in-house procurement team to bring their skills up to the required level.

RESULTS

Based on our expert analysis and guidance, the client reduced its number of manufacturing plants and transportation costs drastically. Through analyzing current contracts, carrying out supplier market analysis and negotiating new contracts, our team implemented procurement improvements that allowed our client to make significant progress towards its $20 million savings target.

The organizational transformation work done by OnDemand has resulted in the evolution of the client’s procurement team from a fragmented group who lacked the required skills to carry out their roles, into a nimble, high performing procurement organization that is valued as a strategic partner to the rest of the business.