An Automotive client in the Midwest enjoys a 9.5% savings:
This client approached Strategic Advantage (SAI) to help analyze their corrugated spend for savings. They had been with an incumbent supplier for many years, and a second supplier had given notice that their plant was closing.
Using the BoxPrice Method, SAI analyzed over 250 SKUs to develop a view of potential savings. SAI’s projection was set at a minimum of 7% savings on a spend exceeding $3.2 million. SAI not only found savings, but also identified local suppliers who were both capable of exceeding the savings target and were equipped to meet the client’s packaging needs. At the conclusion of the project, SAI had negotiated savings in excess of 9% while retaining the incumbent supplier and replacing the departing supplier’s position. Our client was very pleased, saying:
“The efforts of Strategic Advantage* resulted in a cost reduction of 9.5% on a total corrugated spend of over $3 million in an extremely competitive market….I highly recommend the services of Strategic Advantage…”
Using The BoxPrice Method, SAI knows that every detail matters. Our projections are data-driven as opposed to opinion estimates. We analyze every SKUs cost, down to 4-digit precision.
SAI was asked to evaluate the corrugated packaging savings potential for this company, located in Pomona, CA. On our first visit, we saw a corrugated storage warehouse holding over 4 million square feet of mostly obsolete packaging. There were nearly 400 active SKUs, most of which were rotary die cut styles. Their box supplier had also negotiated a shipping arrangement of FOB Supplier; i.e., the customer paid the freight costs.
The plant itself was a model of automated packing equipment running very efficiently. But as often happens, the cost of corrugated was not watched as closely as was the cost of other raw materials. Corrugated is often the last material category considered when evaluating the costs of purchased materials.
After conducting 28 successful Southern California projects, we knew which plants were ideally suited to handle this client’s corrugated needs. The client’s packaging mix included extensive die cut tooling, so the challenge was to minimize the impact of a change in supplier. It was clear that we had to work first with the incumbent supplier to see if our savings goals could be reached.
After a number of meetings with the incumbent supplier’s entire production team, we were able to find production efficiencies for them (and a few pricing “mistakes”) that permitted the incumbent to remain the primary supplier.
After the project successfully ended, the client wrote us to say:
“The result is that [Client] is not only saving over 9% on a total spend approaching $3 million, but SAl was also able to eliminate an industry-wide price increase that was attempted as the investigation was underway. The really good news is that the savings are coming in as projected and were obtained from our incumbent supplier, so there was no transition or changeover of vendors to have to deal with.”
This client asked SAI to survey three plants in the southeast Carolinas. Loyalties to incumbent suppliers were very strong, and we were able to keep most incumbents, but a few others were not able to meet our savings criteria. Below, the client speaks to his satisfaction of SAI’s work:
“You have now concluded the Corrugated Savings Initiative for three of our Central Group divisions with outstanding success. The purpose of this letter is to express our thanks as well as provide an emphatic endorsement of the methods employed by Strategic Advantage in the execution of the project. The savings you have negotiated are substantial.
We gave you a challenging assignment when we asked you to see if you could save us significant money on our purchases of corrugated. As a company, we buy a substantial amount of corrugated and presumed the volume alone would have put us in the best of class pricing levels. Using your software tools and your unique approach to supplier negotiations, your team not only showed us how much more there was to save, but also went on to acquire the actual savings on our behalf.”
A major advantage for a multi-location company is the opportunity to leverage the buying power of combining several plants in the negotiation. This applies not only to plants that are in close proximity, but also plants that are far apart. The reason for this is that many corrugated suppliers also have plants placed throughout North America. The BoxPrice Method team knows where these multiple supplier plants are and has successfully blended significant savings for our multi-location clients.