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Strategic sourcing case study: August 2013

Value Example #1: Large single location retail business

Client challenges:
• Profit margins had declined 5% to 10%
• Rising expenses on supplies

After several months, client management could not find viable solutions to the challenges and hired Sourcing Business Solutions.

Action taken by Sourcing Business Solutions:
• Reviewed business processes and internal controls
• Overall expenses and company spending information was analyzed
• Key item pricing and services were negotiated with suppliers
• Operating efficiency best practices were compared to the client’s processes

Results:
• Profit margins are up double digits over the past 12 months
• Expenses and labor were reduced over 10%
• Internal controls were improved
• Sourcing Business Solutions assisted the client find a new manager

Value Example #2: Multi-state and multi-location service business

Client Challenges:
• Company cash was used frequently by store managers for normal business needs
• Store purchases were not properly detailed or documented
• Store supplies were acquired from over 50 different suppliers
• Few negotiated prices existed for store supplies
• An eProcurement system did not exist to drive spending compliance

Action taken by Sourcing Business Solutions:
• Data was analyzed to determine the savings opportunity
• Competitive supplier Request for Proposals (RFPs) were performed using Ariba technology
• Suppliers were qualified to determine the best possible competitors to include in the RFPs
• Post bid, supplier negotiations took place

Results:
• 23% savings on store supplies
• An eProcurement system was purchased and implemented
• Lower negotiated prices were built into catalogs on the eProcurement system
• Store Managers started ordering from the new eProcurement system to capture the savings from the RFPs

Value Example #3: Multi-site Manufacturer

Client Challenges:
• Category detail for relocation expenses was limited
• Relocation expenses had not been strategically sourced in many years
• Several different suppliers handled relocation and household goods transportation

Action taken by Sourcing Business Solutions:
• A detailed review of all expenses for the relocation category was performed
• Work groups were interviewed regarding current relocation processes
• A strategic sourcing event was designed and created in Ariba technology

Results:
• 12% savings were achieved with relocation and household goods transportation costs
• Suppliers were consolidated simplifying processes and internal communication

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