PowerCo urgently needed to revamp its global procurement strategy. The company trimmed procurement spending by 14% during a previous effort but despite these gains, PowerCo’s financial performance remained mixed. When a private equity firm acquired PowerCo, the new owner aggressively pursued additional purchasing savings in preparation for a sale, but PowerCo had already captured the easy wins.
PowerCo’s senior management needed to identify cost reductions that would boost profitability in the current fiscal year. Like most companies, procurement represented a major savings opportunity since it typically is the single largest cost item. Extracting those savings often proves challenging due to limited spending transparency. PowerCo needed to not only enhance short-term profits but also develop a global purchasing strategy for long-term savings.