Organizational design

Cost and innovation pressure is often reflected in purchasing. Companies are forced to set up purchasing organizations or to align their purchasing practices towards the growing demands. We help companies to ensure that purchasing is optimized successfully.

Challenges and trends

Cost and innovation pressure is rising across industries. This pressure is often reflected in purchasing, which must reduce costs while at the same time providing innovative products. This forces companies to set up purchasing organizations. Companies are being forced to align their purchasing practices toward these growing demand.

A new Roland Berger Strategy Consultants study examines the purchasing practices of nine global automotive manufacturers. The study identifies six cross-industry trends:

Purchasing units must find the right response to each of these trends. To ensure that purchasing is optimized successfully, companies with a good strategic setup consider three factors:

• First, purchasing and other areas should pull together and strive for the same targets.
• Second, steps taken must also ensure that costs are reduced in a lasting manner.
• Finally, actions must be fully implemented and their success monitored.

The Roland Berger purchasing framework has three levels:

1. Purchasing strategy – Links purchasing initiatives to the company's strategy and requirements and provides clear guidance on expectations and performance improvement targets
2. Purchasing performance – Covers all aspects of value creation, including long-term realization of savings, leading service levels, and efficient capital structure
3. Purchasing enablers – Ensure the sustainability of performance improvements

Roland Berger Strategy Consultants provides standardized approaches that are customized to each customers' needs. The approaches include benchmarking, comprehensive cost reduction, low- cost country sourcing, systematic commodity management, leveraging optimal suppliers, organization and process development.

Benchmarking and organizational development

A global automotive OEM asked us to assess the procurement practices of its main global competitors. We identified current trends in procurement and made recommendations on how to achieve benchmark levels within two years.

We conducted an in-depth benchmarking study of all key areas and developed recommendations with the client on how to move ahead of the competition and develop the best possible procurement organization. The recommendations are currently being implemented, and the client is expected to reach benchmark levels within the targeted timeframe

Reducing costs

A global aerospace OEM asked us to improve purchasing. We reviewed top supplier contracts for ongoing and future business and aimed to realize net savings of EUR 270 m (11%).

A cross-functional team conducted a comprehensive cost reduction program and set up a quality gate process with clear savings rules. We then validated savings ideas, and a monitoring committee supported implementation.
More than EUR 190 million in net savings were realized in the first 18 months of the program. What's more, supplier roadmaps have been defined and development programs launched for key suppliers.

Developing the organization

A global automotive OEM asked us to globalize its non-production material (NPM) procurement practices. The aim was to develop a best-in-class procurement practices to realize global process synergies and savings of USD 140 million.

We conducted a benchmarking study, assessed gaps with the client and identified necessary improvements. As a result, a clearly defined global NPM organization has been developed, as has a structured approach to generating savings. The savings target has since been consistently overachieved and the organization is now recognized as an innovative role model for OEMs.