A Sourcing Project on Tyres

Client Profile

A publicly traded multinational that spends over €12 million on tyres every year.

Project Scope

It was difficult for the multinational to control the costs associated with tyres. In an environment with commodity prices rising significantly, Hudicor was tasked with developing and implementing a sustainable tyre sourcing strategy. The improvement of tyre sourcing could result in both cost savings and increased sales.

Hudicor’s Approach

Based on the Hudicor strategic sourcing methodology, we conducted a strategic sourcing project on tyres. The process began with the mapping of internal needs. We then conducted an external supply market analysis, including one-on-one interviews with suppliers. Among other things, these analyses revealed that one supplier accounted for 60% of tyre spending, with higher prices and similar price conditions than other suppliers who were striving to increase market share.

In consultation with various stakeholders, we developed a sourcing strategy that focused on cost reduction and security of supply. We then created an advanced total cost of ownership model to facilitate complex fact-based negotiations that resulted in lasting savings. As a result of this, the procurement process was simplified and an improvement in monitoring of supplier contracts and supplier performance was achieved.