SpendEdge Helped an Aerostructures Manufacturer to Achieve Annual Savings of $150 Million in Direct Material Costs
Global Aircraft Industry Overview The aircraft industry is experiencing growth due to rising demand for air travel. To keep pace, aircraft companies are looking to increase production. This is putting pressure on the industry’s supply chain and compelling companies to grow aircraft production and sales. However, companies depend on suppliers to reduce costs and improve […]READ MORE >>
Global Aircraft Industry Overview
The aircraft industry is experiencing growth due to rising demand for air travel. To keep pace, aircraft companies are looking to increase production. This is putting pressure on the industry’s supply chain and compelling companies to grow aircraft production and sales. However, companies depend on suppliers to reduce costs and improve their sourcing process – which becomes an arduous task for companies. Read this case study to know how we helped one of our clients to reduce costs by improving the sourcing and supplier management process.
Business Challenges Faced
A global aerostructures manufacturer in the aircraft industry was facing predicaments in lowering supply chain costs. They wanted to cut down their direct material costs by 25% to become more competitive. For this, they needed to renegotiate supplier contracts. However, the inefficient procurement processes, inability to capture supplier data, and no single view of supplier performance was making it difficult for the client to reduce costs. Long source-to-contract timelines and lack of insights to transform procurement were further adding to the woes. The client, therefore, decided to leverage SpendEdge’s expertise in minimizing procurement costs and executing contracts rapidly.
Inability to perform aircraft industry analysis and reduce costs can impact the competitiveness of companies. Request a free proposal and our experts will get back to you with industry-specific insights.
Our Research Approach
To help the client reduce costs, the experts at SpendEdge conducted an aircraft industry analysis. They measured the effectiveness of the client’s existing direct sourcing process and identified gaps. Based on the insights gained, they developed a sourcing strategy that involved finding low-cost countries and identifying potential suppliers. This helped the client to bring all suppliers to the same payment terms and improve sourcing execution.
Moreover, the detailed aircraft industry analysis helped the client to devise a comprehensive category strategy and group similar items that fit suppliers’ profiles. The experts identified suppliers from low-cost countries who could supplement existing supplier capabilities and comply with Federal Aviation Authorities (FAA) while meeting timelines of delivery. They created a framework to avoid bottlenecks and reduce negotiation timelines during the sourcing process to onboard new suppliers.
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SpendEdge’s customized aircraft industry analysis changed the client’s approach to direct sourcing and negotiation and helped them achieve annual savings of $150 million in direct material costs. Consolidation reduced the number of suppliers to 50%, mitigating supplier risks and reducing supplier management costs. Additionally, source to contract timeline was reduced by 40%.
Increasing aircraft industry market share requires companies in the aircraft industry to develop effective sourcing and negotiation strategies. Request a free demo to access our web-based procurement platform and gain detailed insights.
Key Components that Make Up the Global Aircraft Industry
To know the contribution of the above-mentioned components in the aircraft industry market share, request more information for our experts.