CASE STUDY

How Effective Material Procurement Helped a Pharmaceutical Company to Reduce Logistics Costs By 35% – A SpendEdge’s Success Story

Mar 7, 2019

The Business Challenge

The client, one of the leading multi-billion-dollar pharmaceutical companies in the world, was facing predicaments in determining the optimal inventory for raw materials. Their material management process of ordering the raw material from suppliers was quite slow and needed to be placed well ahead of times due to long lead-times. This was resulting in differences in the amount ordered and the amount really needed at the time of delivery by the pharmaceutical company.

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Solutions Offered

To help the pharmaceutical company to better manage the material procurement process flow, the procurement experts at SpendEdge tailored a comprehensive market research methodology. The research methodology involved primary and secondary research coupled with qualitative and quantitative assessments to help the client select new suppliers to purchase in accordance with the company’s internal procurement criteria.

In a short span of five weeks, the material procurement experts at SpendEdge were able to analyze and implement material management solutions to address the uncertainties caused by unpredictable market demands. Their recommendations helped the pharmaceutical company to create appropriate safety stock of raw material that can serve as a buffer against the uncertainties. This reduced their lead times by over 50%. Furthermore, the detailed forecasts and raw material purchasing agreements devised by experts enabled the client to address any potential delays in the material procurement process.

Interested in optimizing budgets for your material procurement process? Request a free proposal and know how our procurement services can help you reduce excess spend and streamline sourcing processes.

Key Findings

Improvements in the material procurement process helped the pharmaceutical company to maximize the availability of raw materials for internal and external customers. They were also able to minimize warehouse stock of procured raw materials, which reduced their logistics costs for procurement by 35%.

Why is Material Procurement Important?

In recent times, material procurement is considered a strategic function to improve the organization’s profitability. It helps companies to reduce raw material prices and costs,  identify better sources of supply, and reduce lead times. However, material procurement basically depends on two factors: information and supplier relationships. Information can be gained through technology but relationships with suppliers need to be established with time so that products move through the pipeline faster.

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