CASE STUDY

Tail-Spend Optimization helps Leading Pharma Company Achieve over USD 10 Million in Savings

Dec 7, 2016

Business Challenge: The client was facing challenges with tracking and managing spend across regions with different suppliers

The client, a leading pharma company had USD 80 million MRO category-spend spread over 800 suppliers across four different locations. This led to challenges such as data inconsistency, poor category structure, fragment process etc. They were aware of the fact that there could be significant cost savings by streamlining the whole process and were looking for external support for the same.

Situation: The client wanted to explore the possibilities for streamlining the process and achieve improved cost savings

The client was looking to implement an exhaustive spend assessment of their MRO category in order to rationalize supplier base, deliver savings and streamline sourcing processes.

Approach: Developed recommendations on the key selection parameters, developed a supplier scorecard with details of key suppliers

On the basis of our rigorous research and analytics we recommended an implementation of an innovative 80/20 approach which targeted (for supply consolidation) only such sub-categories which constitute less than 20% of total MRO spend. We also developed recommendations for formulation of short and medium term spend strategy, demand aggregation/consolidation, supplier base optimization etc. Our recommendations enabled the client in identifying major saving opportunities by leveraging tail-spend analytics and spend management services.

Impact: Client leveraged the understanding of supplier landscape and key selection parameters, to qualify the best suppliers for the RFP stage

Based on implementation of our recommendations, the client was able to achieve more than USD 10 million in savings across categories.  They were able to achieve up to ~26% savings specific to certain categories and an overall 57% reduction in supplier base resulting in significant savings. They were also able to achieve significant process improvement.

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