Retail
European hardware chain needed a new local strategy in China to reverse of lackluster performance
SITUATION
The company's own sourcing office in China had performed poorly over the past decade. Many procurement activities were controlled not by the head office, but by the local site itself.
- Supplier approval process not in place.
- Supplier relationships evolved over time into personal relationships.
- Reluctance to develop new suppliers.
- Supply and price risk was not systematically managed.
- Low focus on procurement as key EBIT driver.
To address these issues, management decided to close its sourcing office but continue its presence and strategy by employing EPG to manage their day-to-day and strategic operations in China, and help ensure that the core elements of the supply chain were robust and agile enough to support, rather than hinder, their continued growth.
EPG CONTRIBUTION
• Managing daily and strategic merchandising operations for privat label products.
• Implementing methodologies to drive down prices and take out cost.
• Expansion of the supplier portfolio and dual sourcing in the private label sector to reduce outage risk and thus strengthening of negotiating power.
• Co-creating category specific strategies in alignment with the company's overall goals.
• Resetting the bar with suppliers, raising expectations and quality of supplier collaboration to ensure resource availability.
• Proactively managing suppliers, develop and transform supplier relationships by positioning the company as a core thought partner in critical negotiations.
• Defend price increases by implementing long-term agreements.
• Powerful toolbox of methods.
• Real time reporting.
• QC & QA.
• Risk & bottleneck identification.
• Digital tools to gain transparency into multiple tiers of suppliers to fully assess upstream risks.
• Shift towards more circular production processes (recycle, reuse, remanufacture) to lowering costs and creating less waste.
RESULTS
• EPG’s procurement outsourcing operation contributed to the company’s cost savings of more than $12.5M based on their +$50M purchasing volume from China.
• A supply chain that are resilient to disruption and flexible enough to capture new sources of competitive advantage.
* We take our clients' confidentiality seriously.
While we've not included their names, the results are real.
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