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Overhauling A leading food industry client's Value Chain for Strategic Success

Background

A multinational food industry leader, emerged from a series of strategic mergers and acquisitions that expanded its global footprint. While these expansions created opportunities, they also introduced complex challenges in supply chain management and procurement efficiency.

The Challenge: Inefficiencies in Sourcing

Through this in-depth analysis, we uncovered specific challenges hindering our client’s performance:

  • Tactical Buying Reliance: Over-reliance on tactical buying was preventing client from realizing potential cost reductions and other value contributions, leading to missed opportunities.
  • Transactional Supplier Relationships: A tactical approach to supplier relationships was missing opportunities to drive extensive value and foster long-term partnerships.
  • Strategic Sourcing Deficiencies: A lack of strategic sourcing know-how, compounded by gaps in aptitude and attitude, undermined their ability to secure cost-effective and quality materials.
  • Ineffective Sales, Inventory & Operations Planning (SI&OP): An inefficient SI&OP process was negatively impacting supply assurance and creating visibility issues for the CFO, hindering strategic planning.
  • Resistance to Integration: Cultural resistance to integration was hindering both the company’s culture and operational efficiency, limiting their ability to innovate and adapt.

Specific Diagnostic Insights

Our initial assessment uncovered nuanced procurement inefficiencies:

  1. Strawberry Sourcing Analysis:
  • Extreme price variability ranging monthly
  • No guaranteed 12-month supply coverage
  • Unclear supplier capability connections
  • Potential for strategic contract optimization

 

  1. Dragon Fruit Procurement:
  • Purchase price fluctuations between $0.57 to $0.64 per KG
  • Inconsistent buying patterns
  • Opportunities for volume consolidation and strategic negotiations

Our Solution: A Transformation Roadmap

Based on our findings, J.Gardner Group developed a targeted and comprehensive action plan to address Thrive’s challenges and enable growth

  • Transitioning to Strategic Sourcing:

We guided our client in shifting from a tactical buying approach to a strategic sourcing model. This involved developing category strategies that aligned with client’s overall business objectives, ensuring a more proactive procurement process.

  • Establishing Strategic Supplier Relationships:

By identifying and consolidating key suppliers, we helped client foster long-term partnerships that enhanced collaboration and innovation. This strategic alignment allowed them to leverage suppliers’ capabilities, driving efficiencies and reducing costs.

  • Implementing a Total Cost of Ownership (TCO) Approach: 

We introduced a TCO framework that enabled client to evaluate suppliers based on comprehensive cost factors, including logistics, quality, and service. This holistic view of costs facilitated better decision-making and improved supplier selection.

  • Enhancing Sales and Operations Planning (SI&OP): 

Our team linked procurement with sales through an improved SI&OP process, ensuring better alignment between supply and demand. This integration provided our client with enhanced visibility and control over their supply chain, reducing risks associated with demand variability.

  • Fostering a Culture of Collaboration: We emphasized the importance of collaboration across departments, breaking down silos and promoting transparency. This cultural shift was essential for driving operational efficiency and ensuring that all stakeholders were aligned with client’s strategic goals.

 

The Outcomes

Our strategic sourcing initiatives delivered comprehensive, measurable results across multiple critical dimensions:

  • Cost Savings: 
    • Strawberry Category: Potential savings of $4 million through strategic contracting
    • Dragon Fruit Procurement: $419,000 savings opportunity identified
    • Packaging Optimization: $1.8 million potential savings
    • Client achieve an estimated $11 million in annualized savings potential through improved sourcing practices and supplier negotiations.
  • Operational Efficiency: The transition to strategic sourcing led to significant improvements in procurement cycle times, enabling client to respond more swiftly to market demands.
  • Supplier Performance:
    • Consolidated supplier base for strategic partnerships
    • Established clear performance metrics and evaluation criteria
    • Leveraged suppliers capabilities in: Food safety practices, Innovation potential and Quality consistency
    • Reduced supply chain risks through strategic supplier management
  • Cultural Transformation: The focus on collaboration and transparency fostered a more engaged workforce, contributing to overall organizational success.