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Case Study

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Leveraged global scale to deliver sourcing savings of $51m in six months

Business challenge

Our client aimed to capture sourcing savings by capitalising on its newfound scale, global presence and prominence in the market.

Context

A global miner was heavily leveraged from a global expansion and wanted to reduce its cost base by running a sourcing savings program.

Procurement was managed individually at each site, rather than from a central position, which limited its buying power. A major expansion project had been completed, and a transition was required from project set up to steady-state operation.

Business impact

$0m

in annual savings off the targeted $630m annual spend base

$0m

in savings from global OEM (Original Equipment Manufacturer) suppliers

$0m

in savings from sourcing OPM (Original Part Manufacturer) or credible aftermarket parts

$0m

in savings from global supply agreements for chemicals, lubricants and drilling services

$0m

in savings of parts and services from regional suppliers in South America, Africa and Australia

$0m

of spend placed on contract for better transparency and reduced workload

Solution

Top Line Solution

Determine addressable spend to identify where there is global scale and overlaps between sites and common purchasers/vendors

Establish sourcing strategy per category, such as direct negotiations, global and regional tenders, rapid sourcing on tail spend

Engage with vendors to negotiate better conditions, using the client's scale to motivate for discounts/rebates

Key Takeaway

Intensive research per market is of paramount importance

In an environment where the suppliers are facing cost inflation pressures, a simple negotiation alone is not enough to reach results

A thorough understanding of the cost base and supply market is required in order to negotiate productively

Collaborative solutions with incumbents need to be defined and implemented

LeftProcurement and Supply ChainLeftMining and Metals