Aerospace manufacturer deploys world-class indirect procurement capabilities through outsourcing

Situation:

The growth in air travel, coupled with aging fleets, has increased the demand for new aircraft, creating a significant growth opportunity for this aerospace manufacturer. To meet this opportunity, the company initiated changes to focus critical resources on new aircraft programs and to lower costs and improve efficiencies through consolidation of multiple plants. To support these company initiatives, the company's procurement organization identified the need to reallocate internal procurement resources to focus on core categories, while improving cost reductions and purchasing processes for their indirect categories.

Solution:

To address these objectives, they began looking for a provider that could effectively manage the full procurement lifecycle, coordinate and effectively manage supplier relationships, and support a broad range of indirect spend. ICG Commerce was selected and worked with the company to drive a company-wide procurement program and rapidly began leveraging its deep strategic sourcing capabilities and category expertise to drive savings in core categories. A transactional procurement Buying Center was established to help them optimize the purchase-to-pay process, while improving end-user customer service. To help them through the transition to their consolidated facility and new suppliers, ICG Commerce implemented eProcurement technology to automate and streamline purchasing, new suppliers, and catalog content. The solution also included ongoing internal compliance management and external supplier relationship management.

Results:

In less than a year, the company has leveraged their relationship with ICG Commerce to free up internal resources to focus on direct materials and to begin driving savings and process improvements in indirect areas. Average savings have exceeded the target of 6%, with some categories achieving as high as 38%. New suppliers are exceeding the delivery lead-time targets by 5 – 7 days. Order processing time is down from 30 days to 8, with additional improvements for orders placed via the new eProcurement system.