A major mining house in South Africa believed that there was significant cost reduction potential within their organisation, but were unsure of the true potential, and how to go about achieving the identified cost reductions. The client also believed that their procurement structure and strategic procurement processes required improvement that would deliver benefits.
Services
Caliba were engaged over a three-week period to:
- Evaluate the top 23 contracts nominated by the client
- Evaluate the effectiveness of current category management practised by the client
- Benchmark the effectiveness of current contract management practices
- Identify category management improvement opportunities
- Identify contract management opportunities
- Evaluate the appropriateness of the existing procurement function design
Outcome
Caliba delivered a detailed report with the following findings and recommendations:
- Based on benchmarks and experience, a further 4.1% value can be derived from the existing contracts
- Internal stakeholder engagement can be improved
- Strategic category managers need to be better equipped
- Pro-active monitoring of market dynamics and indices can build competitive edge
- Cross-functional inputs to be incorporated into category strategies
- Two structural opportunities were tabled to improve the effectiveness of the procurement function: partial outsourcing or full outsourcing of the strategic sourcing function
