Diagnostic Spend and Procurement Capability in the Automotive Industry
Procurement diagnostic project
Sustainable value created
- Development of the spend categorisation and introduction of a relevant taxonomy, achieving to the needed spend transparency
- Detailed analysis of category spend, with a spend reduction strategy and action plan, valued at €13 million/year, realised in subsequent strategic sourcing projects
- Development of a governance and operational model for the procurement, aligned with the company strategy
Client Profile
An automotive company with a spend of about €230 million on direct and indirect materials and services.
Project Scope
This client’s procurement process was very rudimentary, it was mainly done in-house and lacked a taxonomy or clear spend categorisation. Obvious savings opportunities went unidentified and untapped, and the procurement function and its governance was still unstructured. This project presented clear opportunities for improvement.
Hudicor’s Approach
In the initial phase of the project, we focused on achieving spend transparency and defining an appropriate taxonomy. We conducted a data analysis and interviews with key stakeholders. The final step in this phase was to conduct an in-depth analysis of the category spend, including contracts with, and invoices from the main suppliers.
Leveraging our extensive spend category and sourcing experience, we were able to identify the potential and feasibility of savings in each spend category. With that information, we developed a sourcing plan, with potential annual savings of €13 million, a road map, and business cases. These developments, together with our collaboration and support, facilitated consequent strategic sourcing projects and the realisation of actual savings.
At the same time, we developed a governance and operating model, including a transformation plan for successful implementation, and proposed it to the board for approval.
The senior leadership of the company was pleased with the spend transparency which enabled spend reduction and value creation.
A clear future-proof governance model was defined and aligned with the stakeholders.
Interested in accelerating procurement performance and savings?
