A robust Supplier Performance Management (SPM) program helped identify key long-term supplier partners and improved overall supply chain performance.
Strategic sourcing initiative helped a US based agriscience solutions company to achieve significant cost reduction and supply chain resilience for one of its raw materials.
Overview
Company needed to improve its guar gum sourcing, which is used in soil erosion control. In the past it relied on local US distributors for supply, but rising costs and risks made alternative sourcing strategy imperative. With India producing 85% of the world’s guar gum, direct sourcing became a smart move.
Challenges
- Over reliance on local US distributors created cost inefficiencies and supply chain vulnerabilities.
- Lack of expertise and resources to handle complex international sourcing and supply logistics.
Solutions
We undertook a comprehensive strategic sourcing program that targeted cost optimization as well as enhanced supply chain robustness. The program was executed over a period of 3 months.
Various work streams included –
- Market Research: Conducted an in-depth analysis of the Indian guar gum supply market, identifying potential manufacturers and understanding regional supply dynamics.
- Supplier Identification: Evaluated 30+ suppliers on key parameters (capacity, quality, compliance), further narrowing down to 12 potential partners.
- Competitive Bidding: The supplier list was further shortened to 7 through a comprehensive RFP (Request for Proposal), which were meticulously assessed for quality, pricing, and reliability.
- Due Diligence and Selection: Executed a thorough due diligence to select 3 finalists based on interviews, client references, and supplier site visits.
- Pilot Testing and Project Management: Coordinated a pilot shipment, overseeing every aspect from contract negotiation to logistics (India to USA warehouse) ensuring a smooth transition with the selected supplier.Â
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Results
Achieved over 20% reduction in total landed cost as well as enhanced the supply chain reliability through direct contract with the supplier/s.
Key outcome of this exercise included –Â
- Diversified supply base to reduce reliance on local distributors.
- Improved cost position through direct contract with the manufacturers.
- Improved supply chain visibility from producer to the USA warehouses.
Strategic Sourcing process uncovers the opportunities to improve total cost of ownership.
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