Spend Analysis Engagement: How an Organic Food Manufacturer Achieved Cost Savings of $35 Million

Overview of the global organic food market

In today’s world, where the latest and greatest cutting-edge technology powers everything, farmers are heralding back to age-old practices in agriculture for the greater good of humankind on this planet. This has been marked by the rise of a new crop of health-conscious consumers, who are aware about the detrimental effects of chemicals and other hazardous additives in food. The growth of the global organic food market is driven by key factors such as increasing organic farming in the world, consumers’ awareness towards the benefits of organic foods, and implementation of favorable government regulations. Additionally, the demand for organic food is increasing in conventional food supply stores due to the development of private label brands and rising interest of large retailers to sell organic products.

Although the organic food market is expected to witness significant growth, a few factors are hampering the prospects. They include:

• Pricing: High prices of organic food, when compared to their conventional counterparts coupled with their short shelf life, are expected to hinder the growth prospects.
• Inflation: As the customer needs and expectations continue to evolve of a daily basis, global organic food manufacturers must look to increase the stress on meeting the relentless demands of the customers while compromising on the costs. Additionally, due to the inflation, the purchasing power of the customers have drastically narrowed down, which further affects the growth prospects.

To overcome such challenges, it is best recommended for players in the organic food market to utilize spend analysis solutions. Spend analysis solutions provide businesses with a comprehensive view of future spending requirements based on the forecast data. These solutions also aid organizations in reducing inventory, improving sourcing cycle time, and accomplishing long-term planning and economic forecasting.

The Business Challenge and Journey

Client background: One of the world’s leading organic food companies with over $11 billion in revenue and a global portfolio of 9 diverse, well-loved, brands wanted to increase their focus on creating a healthier relationship between their food products and the people while continuing to boost its profits.

Client issue: The company knew it could save money in indirect spend areas like office supplies, computers, and equipment— and old technology that led to manual work and reduced productivity.

The spend analysis experts at SpendEdge carried out extensive research, comprising interviews and debates with prominent stakeholders in the global food and beverage industry, to assist the client in saving money on indirect spends.

Client journey: With the help of SpendEdge’s spend analysis engagement, the organic food manufacturer achieved benefits in terms of:

• Sourcing: Consolidated spend across brands, categories, and businesses, lacing up the team’s knowledge of negotiation skills and management, and finishing with a new and improved supplier database to be used across the company.
• Procurement: Created a shared service center to improve effectiveness, blended master data, and established an online catalog to reduce leakage and ensure compliance.
• Technology: Implemented technology systems and processes to digitize sourcing, manage contract life cycles, document and approve travel expenses, and maintain supplier networks.
• Accounts payable: Standardized payment terms, leading to shorter payment and invoice times and an increase in early-payment discounts.

Key questions answered in this spend analysis engagement

The Results

The organic food manufacturer achieved cost savings of $35 million and a six-fold improvement in effectiveness. Additionally, the client’s spend visibility rose from 40% to 98%.

To know more about spend analysis solutions for the food and beverage industry

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