World leading packaging company, Alcan, asked ADR to reduce the costs of its purchased materials. The initiative was extended to include plants in the UK, France, Germany, Switzerland, Italy, Canada and the USA. The main aim of the initiative was to identify potential areas of cost reduction through the analysis of the company’s purchasing capabilities.
Following the baseline assessment, ADR established a programme of different approaches for global (class A), regional (class B), and locally decided (class C) sourcing strategies. Purchasing teams were selected and strategic source plans were created only after they had achieved tactical control of existing expenditure. ADR was closely involved in supporting the Global Head of Purchasing, in the planning approach, training the team members and facilitating the strategic sourcing team meetings.
The initiative created significant competition advantage for Alcan’s businesses by obtaining:
- Improved pricing and commercial terms
- Faster service
- Lower working capital levels
- Company-wide adoption of the “best” deals
As testament to the success of the initiative, this purchasing approach has remained through several changes in Alcan’s ownership. Furthermore, this strategic sourcing team approach was copied and extended across all Alcan businesses.
Identify cost reduction areas
Improved pricing and reduced costs. Faster service and lower working capital.