Source: A.T. Kearney analysis
across all business functions and, if executed well, can significantly improve the
bottom line.
PROCUREMENT
Sourcing. For many sourcing events,
optimization can help match expressive
or non-standard offers with the business
requirements. Potential suppliers often
come up with volume or package discounts, step-change pricing, alternative
offers, capacity constraints or other ways
to showcase their strengths. However,
these complex offers cannot be taken at
face value, and optimization is required to
A NA L Y T I C S
assemble the puzzle pieces into a coherent picture that covers business requirements and minimizes purchasing costs.
Another benefit of this approach is that
a sensitivity analysis can be used to estimate the costs of business constraints
and challenge business stakeholders on
the ones that are less crucial to business
(see Figure 3). For example, typical sourcing events for transport services result in
an 8 percent to 12 percent cost reduction.
Sourcing with strategic network
design. Sourcing optimization conducted jointly with strategic network
design can be especially beneficial. In
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