Procurement Cost Savings for a Food Manufacturer

Challenge

A third-party, outsourced study conducted for a multi-million, national food manufacturer identified potential savings opportunities by renegotiating supplier contracts and a SKU rationalization. The manufacturer did not have resources in house to execute this project and did not want to pay the fees of traditional consultants.

Solution

Patina assigned two Professionals with sourcing expertise in food manufacturing to lead projects for the company’s ingredient and packaging categories. Specifications were needed for all materials. Many had to be created. Request for Proposals (RFPs) were sent to incumbent and industry leading vendors. The Patina team negotiated pricing, ran production tests, selected final suppliers, and managed the cutover plan.

A Patina Professional initiated a second project to review adjusting specifications for savings. Working with the suppliers, there were several notable outcomes – packaging designs were updated, new materials were incorporated, and ingredients were substituted to drive additional savings (for example: powder versions vs. liquid versions of the same ingredient). The Patina professional worked with the Sales team to quantify customer benefits so that savings could be realized.

Outcomes

New contracts realized $4.4 million in annual savings after initial bids. Specification changes added an additional $3.5 million in annual savings by changing packaging designs, moving to ingredient suppliers with slightly different products, and swapping similar ingredients. The manufacturer’s customers were supportive of changes due to sustainability benefits, usability of new package designs, and improved product taste and quality.

IT Assessment and Roadmap

Challenge

A growing U.S.-based food manufacturer’s leadership team believed the Board was ready to invest in Information Technology and would like to see a five-year plan. Having a solid application and infrastructure platform would allow for business growth including M&A and new channel growth. The leaders were also concerned about security and potential costs of interrupted production with technology failures.

Solution

A Patina IT Assessment expert was engaged for a six-week engagement with the intention to bring a fresh perspective. Among the solutions the expert provided was to develop an understanding of the business priorities for the Information Systems team and any gaps that would prevent implementing the future business state vision. He assessed the Information Systems landscape using a “people, process and technology model.” Similarly, he assessed the core infrastructure components including current data center provider, back-up and disaster recovery plans (including plant robotics), identity management and network security.

A summary was developed to be used informally at an upcoming board meeting and to set budgets for the next year. It included a proposed, five-year roadmap and financial plan.

Outcomes

The CFO expressed his delight with the process and results from Patina. He stated, “I’ve worked with two consulting firms to address these issues and was not happy. Patina gave me value and exactly what I needed in less time and for less cost.”