Klient v ČR – globálne významný výrobca a dodávateľ pracovných prvkov hydraulických systémov

Client in the Czech Republic – a globally important manufacturer and supplier of working elements of hydraulic systems

Client in the Czech Republic – a globally important manufacturer and supplier of working elements of hydraulic systems

Project duration: 9 months

Focus of the project:

Considering the size of the client's financial turnover in relation to the resulting profitability, the project was conceived as a long-term project of complex optimization of material costs.

The joint project was therefore initiated by conducting a thorough analysis of the entire portfolio of suppliers, purchase conditions and purchase costs. Part of the analysis was also an assessment of supplier risks from the point of view of securing supplies for the further growth of the client and from the point of view of cost sustainability.

It also included an assessment of the organization and functioning of the purchasing department in terms of capacity, flexibility and the ability to effectively address current priority goals.

As part of the results of the initial analysis, in addition to defining the savings potential in the total amount of 2.2 mil. It should be noted that the current portfolio of suppliers is in many cases made up of suppliers with an exclusive position in the relevant commodity, while the competition is minimal. This fact was complicated by the economic situation of the client, when at the time the project was launched, a sharp increase in inflation was already in full swing within the Czech Republic and Europe (a consequence of the Covid pandemic and the beginning of the Ukrainian conflict). In this situation, the client has been exposed to unilateral, uncompromising price increases by a large number of its suppliers for several months, which he was unable to effectively counter.

One of the priority tasks of the Kloepfel team in the initial period of cooperation was therefore to stop the avalanche of price and cost increases. Given these market circumstances, some activities brought results in the form of real savings compared to the previous period, and some activities had an impact on the elimination - reduction of losses (increase in costs).

Based on the initial analysis of savings potential, the following key commodities with the greatest potential were defined:

Turned metalworking parts | Milled metalworking parts | Cast parts |

| Wires and cables | Wooden packaging

Main approaches used in cost optimization:

Price negotiations with existing suppliers (25 suppliers) with the aim of eliminating or reducing the price increase implemented or requested so far and setting parameters for dealing with price changes in the future.
- Part of the process was analyzing the price structure, the cost structure of suppliers, the development of market prices of key material commodities.
- "Should cost" modeling was used with the support of the Kloepfel Engineering team - a detailed analysis of the production processes of some suppliers in order to jointly identify and use the potentials of process optimization by using more efficient production procedures and optimizing material specifications.

Expanding the supplier portfolio with new suppliers.
- Part of the process was the organization of "Supplier Days" for a portfolio of new potential suppliers.