Business challenge
Our client aimed to capture sourcing savings by capitalising on its newfound scale, global presence and prominence in the market.
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
How we helped
- 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