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-: Today, process industries find themselves
in a stagnating macroeconomic environment.
We have a situation where cost is the core focus
of customers along the entire value chain.
At the same time,
procurement makes 60% of the total revenues,
which means it's a huge lever.
-: After a period of strong inflation,
now, producer prices are declining.
This gives companies a crucial,
but limited window of opportunity
to address procurement, to renegotiate with suppliers,
and to set a new baseline in terms of costs.
Typically, we see the opportunity
in a procurement transformation
to drive 2 to 4% EBIT improvement,
which needs to be tackled rapidly.
-: I have experienced firsthand the value BCG can deliver
through a global, comprehensive,
cross-functional procurement cost-out program.
Most recently, I was chief procurement officer
at a construction chemicals company
with a decentralized org structure
and a highly fragmented spend scattered
across more than 60 countries.
Faced with this complex challenge, we collaborated with BCG
to implement a global cost-out program
that played a significant role enabling us
to increase the value of the company
by more than 2 billion euros in just over one year.
Overall, we achieved a 6% cost savings
in an extremely short period of time.
-: In the last five years,
we've helped around 1,500 companies
to improve their procurement setup.
In that, we have a very structured approach
by different supplier segments.
For the top 20 to 40 suppliers,
we find individual approaches that not only focus on cost,
but jointly, we work on the specification setup
and the overall process of delivery.
Then, for the wider vast majority of suppliers,
we use AI-driven tools
to always find the best negotiation technique,
and we actually support our clients
to drive hands-on negotiations jointly with them.
In addition to the commercial levers,
we drive a technical optimization
with a category lens looking at the entire spend
next to the supplier lens.
What's crucial here is,
we have great experts who know the specifications
in the industry,
who know the delivery setups in the industry.
If, for example, you have price shifts
between different input factors,
we right away come to suggestions of new formulations.
We reduce complexity, we increase productivity.
-: So instead of taking the first weeks and months
for backroom analysis, we go straight into pilot projects,
lighthouses, and quick wins
that demonstrate to the organization
the impact we will have along the journey.
We also ensure a governance process
that makes sure the savings land not only on paper,
but also in the bottom line of the company,
so rigorously tracking the implementation of savings.
With this approach,
we ensure an ROI of our consulting projects
of more than 10x over the entire transformation journey.
Finding the best approach
to quickly reduce procurement costs, to improve EBIT,
and at the same time,
to manage quality, smooth operations and risks
is a complex undertaking.
-: We as BCG have 600 experts worldwide in 34 countries
to find the best tailored solution in each supply setup
to improve the overall effectiveness
of every process industry company.
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