At a Glance
As a result of a 20-week project with Renoir, a client in steel manufacturing achieved the following:
- 15% increase in vendor visitations
- 15% increase in active scrap suppliers
- 19.1% increase in alternative grade tonnage
- 0.8% reduction in scrap cost
Background
Our client is a leading steel manufacturing company headquartered in Southeast Asia. They operate production plants in 3 locations in the region and are a subsidiary of one of the world’s largest steelmakers.
As part of the company’s ongoing efforts to improve performance and profitability, the client engaged Renoir to jointly execute a Procurement Excellence Project which would focus on reducing input costs.
The Challenge
ANALYSIS
Renoir conducted a 2-week analysis of the client’s current situation. Sourcing practices, the management system employed, and spend categorisations were examined in detail. The findings included:
SCRAP SECTION
- Current scrap sourcing practices left many potential sources untapped.
- The use of alternative grades in processing was not maximised.
- A perceived lack of local availability led to increased import volumes.
- The client and Renoir agreed that a potential 0.5% to 1% reduction in scrap costs was possible.
NON-METALLIC SECTION
- Current practices in Non-Metallic Sourcing did not maximise leverage opportunities.
- The approach to procurement tended towards passive and was predominantly driven by the production facility demands.
- Spending was often decentralised and made on the spot as opposed to being based on contracts or price agreements.
- The client and Renoir agreed that a potential 3 to 5% reduction in Non-Metallic costs was achievable.
How OEE can help improve your manufacturing operations
Lean Philosophy: When less brings more value
How OEE can help improve your manufacturing operations
Lean Philosophy: When less brings more value
What We Did
Structured over 20 weeks, this program was designed to make a significant impact on both spend areas in short space of time. In alignment with Renoir’s methodology, two Management Action Teams (MATs) were established comprising executives within the client’s teams, and were given the responsibility to review their practices, define and develop changes, and implement them.
The MATs were chaired by the client’s Vice President of Procurement and reported fortnightly to a Steering Committee. Teams were supported by full-time Renoir Consultants and a Task Force, working together toward the objective of lowering the input costs.
Key Results
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Key Actions Taken
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Scrap Section
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Non-Metallic Section
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Results
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Scrap Section
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Non-Metallic Section
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“We have seen the changes made to the way we work and to our team. The intention was to do better and we appreciate the knowledge from Renoir in sharing these ideas with us. Over the 20 weeks, Renoir blended in well with our team and worked together to achieve what they promised.”
– President and CEO
Upon completion of the engagement, there was a noticeable difference in the organisation. Departments worked in unison to achieve common goals and it was apparent that with the implemented new way of working, future procurement for both Sections is now carried out in a more structured methodological way.
Identify opportunities for operational effectiveness and profitability.
