Product standardization saves pharma enterprise 34% on MRO supply chain
The customer
A multi-billion-dollar U.S. based pharmaceutical corporation.
The challenge
As part of its ongoing commitment to YoY savings, DSSI engaged its client in a PPE material standardization program across five of its large manufacturing sites. This company had previously negotiated contracts with several large distributors on PPE items and so the category was fragmented in terms of products and service levels.
How we solved it
Although DSSI had previously negotiated best-in-class pricing on the exact item each plant had been buying historically, we gained agreement on behalf of all the plants to move forward with fully optimizing the category.
Because DSSI had been buying MRO items for the customer for almost two years, our Category Managers were easily able to obtain a list of the required items from each site and identify the manufacturer name and manufacturer part number. We then met with its preferred supplier for the PPE category to communicate the material requirements and requested the supplier field reps visit each site to understand the additional requirements around point-of-use solutions, consignment and stocking levels based on usage.
Also during this time, DSSI worked with the preferred supplier to cross-reference each item the site was currently using to one that the supplier recommended in order to achieve savings. To ensure these new items met the same fit, form and function, samples were provided to each site and approvals were obtained once a suitable alternative had been agreed to.
We then negotiated with the supplier to optimize pricing based on the customer’s usage and service requirements. Once this process was complete, DSSI and the supplier held joint meetings with each site to present the best solution based on its specific requirements.
Upon each site’s approval, DSSI and the supplier put a “Launch Readiness” document into place outlining the agreed upon service levels and stocking requirements so that ongoing performance could be measured and considered when considering the success of the program.
Results
- 34% net savings, representing $200k in annual savings over 300 items
- Increased service levels from the supplier by driving all spend to one optimized solution