Case Study- Savings Opportunity analysis

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Background

The client was an automotive dealership group with 9 sites across multiple states. The size of the organisation had increased significantly through recent acquisitions & site expansions. Although some staff worked within head office, the organisation predominately operated under a decentralised structure, including supplier sourcing decisions.

The client identified that the recent growth & organisation structure created an opportunity to improve costs. These business dynamics combined with deteriorating market conditions meant that reducing costs became a priority. Given the client had no dedicated internal procurement resource, it sought the assistance of procurement experts in Spend Solutions, to assist identify savings opportunities.

Project overview

Spend Solutions was engaged to conduct a savings opportunity analysis on supplier spend. The brief was to uncover savings opportunities through improved sourcing, obtaining better pricing & better utilisation of how products & services were used internally.

By obtaining a supplier creditor report for the previous 12 months, Spend Solutions was able to categorise all suppliers & obtain a view of spend by category, thereby identifying opportunities for improved sourcing outcomes. Invoices were obtained for targeted suppliers to allow a commercial analysis against market price benchmarks, identifying areas to negotiate directly with suppliers to immediately lower costs & improve commercial terms. Further information was obtained through supplier usage reports, supplier contracts & conducting interviews with internal stakeholders to identify further savings opportunities including through better utilisation of products & services.

Project Outcomes

In total, Spend Solutions identified 28 savings opportunities with a projected annual P&L savings of $1.2m. The project split was an even mix between direct negotiations, usage optimisation & tendering to provide the client with optionality to obtain immediate savings & long-term strategic improvements. Spend Solutions also delivered a categorised spend file, further supplier optimisation activities & consolidated supplier contract report.

Overall, the savings opportunity analysis provided the client with key insights into savings opportunities within their business that they would have otherwise not been able to obtain. 

Importantly, it allowed the client to develop a roadmap to prioritise & action projects based on the level of savings & difficulty, thus providing a platform to plan, budget & execute savings opportunities within a structured framework.