#Automotive: The industry is struggling, fundamental changes are occurring, and global economic conditions are requiring executives to rethink strategy.

Case Study: Automotive Supply Chain Optimization

In response to an economic downturn, WGA’s client, a global automotive manufacturer, had to switch gears fast to optimize their supply chain. They needed to make immediate and aggressive changes to offset anticipated multiple year double-digit sales declines. Our global automotive client needed to make immediate fundamental operational changes that crossed functional and value chain borders. A global operational automotive supply chain optimization spend/value analysis identified several key horizontal business functions that could be changed quickly and yield accelerated cost reductions.

Approach: Identify root cause and plan tune-up efforts

With supply chain optimization cost reduction areas identified, WGA went to work. With precision, WGA evaluated the client’s supply chain operations and procurement functions for North America. We immediately identified opportunities in the supply chain organization that our client chose to change. The supply chain optimization opportunities could be made cheaply, quickly and without significant impact or effort. These supply chain optimization opportunities included process challenges, simplifying complexity, optimization opportunities in leveraging our client’s buying power, and addressing consistent supplier failures.

WGA created the game plan and playbook to execute a concurrent three-prong supply chain optimization strategy to consolidate, outsource, redesign, monitor, execute and transition procurement and sourcing functions.

Solution: Tune-up completed enabling our client to change lanes

WGA mobilized, executing the Supply Chain Optimization Initiative that consolidated hundreds of existing business process outsourcing (BPO) and information technology outsourcing (ITO) relationships down to three suppliers. This reduced the complexity of outsourced BPO and ITO processes and transformed procurement to include better and closer supplier performance and risk monitoring. Procurement changes encompassed a review of all existing suppliers; categorized suppliers based upon value to the client, shrank the list of active suppliers, and restructured relationships to include frequent formal financial solvency and value delivery metrics. Collaborating with client teams, WGA led the project management and execution of the BPO and ITO supplier consolidation, sourcing selection and transition, procurement process redesign and uplift, procurement system changes, and executive reporting.

Results: Enduring change transforms project ROI

Our client realized an operational (-$57M/yr) cost reduction on $125M/yr in annual capital expenditures for BPO and ITO services. WGA’s innovations included BPO and ITO adaptive contract models that adjust to our client’s demand/volume requirements allowing for continued price reductions overtime and innovation incentives to allow their supply chain to adjust based upon external factors. WGA also delivered a strategic realignment of supplier relationships and a reduction in the steps and complexity of their supply chain. Supplier performance and delivery risks are now closely monitored and transparently visible to executive supply chain leaders.

To learn more about WGA’s services, please feel free to Contact Us or visit our website at www.wgaconsulting.com.

Posted in Automotive, Case Study, Outsourcing & offshoring, Supply Chain Optimization and tagged , , , , , , , .

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