Annual revenues exceeding €50 million
Challenge
The company’s procurement function was divided into two specialized teams: one focused on live cattle and fresh or frozen meat. At the same time, the other managed the sourcing of packaging and other raw materials. Despite having longstanding partnerships with packaging suppliers, no overarching contracts defined commercial terms and conditions, limiting cost efficiency and negotiation leverage.
Solution
The procurement optimization project focused on crucial packaging materials, including casings and commercial and transportation packaging. Given the small pool of active vendors, the first step involved comprehensive market research to expand the supplier base. This groundwork set the stage for a structured tender process.
Key initiatives included:
- Supplier Base Expansion: The supplier network was broadened to include eight approved chromo carton vendors and twelve corrugated carton vendors.
- RFQ Process and Documentation: Request for Quotation (RFQ) documents were prepared with detailed specifications, including estimated annual quantities and progressive volume-based rebates.
Enhancing the RFQ process, increasing supplier competition, and creating a structured negotiation framework gave the company greater leverage and flexibility.
Outcome
This optimization resulted in:
- A 14% cost reduction in the first year for packaging categories compared to previous costs.
- An additional 3% savings were achieved in the second year through further process refinements and competitive negotiations.
