Procurement Services experts

Background

The client operated in the Queensland automotive industry & had previously worked with Spend Solutions to develop a strategic procurement solution for waste across its 25 sites. For the 1 year contract anniversary Spend Solutions was engaged to perform a waste performance optimisation to validate the forecast savings, identify potential additional savings opportunities & provide insight on how to further improve ongoing performance.

Project overview

Spend Solutions engaged the preferred supplier to conduct a thorough review into the performance of the existing agreement after the first 12 months of operation. 

The review consisted of 4 key activities-

Cost optimisation- review further opportunities for cost savings through standardisation, consolidation, minimisation & simplification.

Compliance assessment- assess if each site is using the preferred supplier as anticipated.

Contract management- review rates, fees & rebates against the agreed contract terms, plus conduct price negotiations for the next 12 months.

Supplier management- Review supplier performance against agreed KPI’s, targets & stakeholder feedback.

Project Outcomes

The review identified a number of improvement opportunities that could claw back forecast cost savings plus obtain further savings through cost optimisation-

· While the new agreement did deliver considerable savings, there were a number of services where rates or fees did not match the agreed rates.

· Not all sites had remained engaged with the preferred supplier, leading to loss of projected savings.

· By reviewing how services were being consumed, significant further savings were identified by optimising service demand with supply.

Overall, Spend Solutions was able to claw back the overcharges & help the client implement further cost savings through simple but effective operational changes, leading to an overall benefit of 14%.