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[BLOG] The Future of MRO Category Management

The Future of MRO Category Management by Zach Kayne, Insight Sourcing Group’s Maintenance, Repair, & Operations subject matter expert In terms of a procurement category, Maintenance, Repair, and Operations (MRO) is notoriously…
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The Future of MRO Category Management

by Zach Kayne, Insight Sourcing Group’s Maintenance, Repair, & Operations subject matter expert

In terms of a procurement category, Maintenance, Repair, and Operations (MRO) is notoriously difficult to effectively manage and accurately track spend, as well as any related savings initiatives.  Many organizations are comprised of multiple operating units or locations that purchase a large volume of SKUs in a decentralized manner, based on specific needs.

For a company that decides to explore our cost-saving group purchasing program, Insight Sourcing Group performs a thorough analysis of current spend, creates a unique core item list, and works with our clients to implement across all addressable MRO products with robust project management.  But what next?  What comes after implementation?  How can companies best capitalize on the savings identified, particularly given the fragmentation across regional or national facilities?

Since the inception of our MRO program, we have been committed to providing best in class monthly and quarterly reporting based on client-specific needs.  We receive key usage data from the program partner, audits for pricing accuracies, formats to client specifications, and provides insights on purchasing habits.   Our firm has continued to innovate in this space, however, and is looking towards the future of enhanced category management: user-led MRO spend and compliance tracking.

Leveraging our proprietary SpendHQ Category Management module, we are taking steps to simplify this complex process and provide our clients with an integrated experience built on our human and technological capital.  Insight Sourcing Group is pleased to announce that the module is now in public “beta.”

Here are a few features within the tool and how they can help your company reduce costs and secure targeted savings.

MRO Category Overview
A quick snapshot of a client’s spend, this view allows users to quickly and accurately understand numerous details about how their MRO spend is segmented: location, pricing tier, item category, core compliance, pricing accuracy, and a number of other spend breakouts can be viewed here. This overview allows even non-MRO buyers or purchasing managers the ability to understand at a high-level how spend is being allocated.

Details
One of the top ways clients can see further savings off of baseline pricing is to drive their spend towards core items – a metric that ISG tracks and provides. ISG’s clients not only use this insight to manage their month-to-month purchasing habits, but also to take control of annual core list management to drive deeper savings to more highly used items.

Pricing Accuracy
Most clients have difficulty determining if the items they’re purchasing are aligned with the contracted pricing that has been negotiated and open themselves up for potential lost savings.
ISG’s Pricing Accuracy module takes the “expected price” based off the contract pricing and aligns it with the actual price paid as reported by the supplier and denotes any differences. This tool allows for easy and quick auditing to ensure that our clients are receiving the pricing they expect on every item.

 

Interested in a demo of MRO Category Management?

Click here and we’ll be happy to schedule a demo.

 

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ISG CEO Participates in Army War College National Security Seminar

Tom Beaty invited to join the special academic seminar and exchange thoughts about national security topics  Friday, June 9, 2017—CARLISLE BARRACKS, Pennsylvania.—Tom Beaty, founder and CEO of Insight Sourcing Group and the…
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Tom Beaty invited to join the special academic seminar and exchange thoughts about national security topics

 
Friday, June 9, 2017—CARLISLE BARRACKS, Pennsylvania.—Tom Beaty, founder and CEO of Insight Sourcing Group and the oral history preservation non-profit Witness to War, participated in the U.S. Army War College 63rd annual National Security Seminar in Carlisle, PA., June 5-8, 2017.


 
Beaty (pictured above 1st row, 2nd from left) was one of 160 business, government, academic and community leaders selected from across the country to take part in the week-long academic seminar alongside the students of the Army War College. During the special academic event, Beaty represented fellow American citizens in discussions with the next generation of senior leaders of the U.S. Armed Forces, enabling for the senior military leaders a deeper understanding of perspectives across the American society they serve. The National Security Seminar was the capstone event of the Army War College’s 10-month curriculum, just before the Class of 2017 graduated with students earning a Master’s degree in Strategic Studies.

The NSS forum was structured around a daily presentation about an issue of significance to the nation’s security, followed by extended and candid discussion of the topic within one of 24 seminars. Mr. Beaty became a member of USAWC Seminar 1, comprising Army, Navy, Marine Corps and Air Force officers at the rank of colonel or lieutenant colonel, a senior federal civilian, and three international officers, representing the United Kingdom, Albania, and Saudi Arabia. He was invited to share perspectives, background and experiences in the capstone event in the Strategic Studies graduate program.

The U.S. Army War College educates and develops leaders for service at the strategic level while advancing knowledge in the global application of land power.

Established in 1901 in Washington D.C., the Army War College relocated in 1951 to historic Carlisle Barracks, Pa. and today, it educates 2,500 senior leaders and strategists annually through a variety of strategic education and general officer education programs.

Learn more about the National Security Seminar and the U.S. Army War College.

About Insight Sourcing Group
Insight Sourcing Group is the largest boutique consulting firm in North America focused exclusively on Strategic Sourcing and procurement-related services. Founded in 2002, the firm works with senior executives and procurement leaders to accelerate Strategic Sourcing savings, increase Spend Visibility, provide category intelligence, and implement procurement best practices. Insight Sourcing Group has worked with hundreds of corporate clients of all sizes and over 50 Private Equity firms.

Inc. magazine has ranked Insight Sourcing Group among the fastest-growing private companies in America every year since 2008, making it one of the few firms to be listed 9 years in a row as of 2016. Insight Sourcing Group was also recently named the #1 Boutique Consulting Firm To Work For in the US in 2016 by Vault.

About Witness to War
The Witness to War Foundation is a non-profit 501(c)(3) and was founded in 2001 by Insight Sourcing Group founder and Atlanta-based entrepreneur Tom Beaty. The Foundation is dedicated to preserving the stories of individual combat veterans.

It is about the “foxhole” or “windshield” view of combat as seen by the soldiers, sailors, and airmen who experienced it. It is about the fear, the emotions, the training, and the previously untapped wells of personal courage that enabled ordinary individuals to survive, and in some cases thrive, under extraordinary pressures and almost unimaginable danger. The Witness to War Foundation is dedicated to understanding, as much as possible, what it was like to “be there.”

To hear some of these incredible stories or for information on veteran interviews, visit www.witnesstowar.org.

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Forbes Names ISG One of America’s Best Consulting Firms for 2nd Year

Insight Sourcing Group named one of America’s best consulting firms for the 2nd straight year  ATLANTA, Georgia — May 3, 2017 — For the second straight year, Forbes has named Insight Sourcing Group…
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Insight Sourcing Group named one of America’s best consulting firms for the 2nd straight year

 
ATLANTA, Georgia — May 3, 2017 — For the second straight year, Forbes has named Insight Sourcing Group as one of America’s best consulting firms in its annual ranking of the Best Management Consulting Firms for 2017.

Clients ranked Insight Sourcing Group high in several functional areas and industry sectors including:

  • Energy & Environment
  • Supply Chain Management
  • Travel, Transport, & Logistics
  • Internet, Media, & Entertainment
  • Operations

To create this ranking, Forbes and Statista (one of the leading statistics companies) ran two waves of online surveys. First, it used information from trade organizations, consulting directories and other sources to build a list of more than 7,000 consulting-firm partners. It invited those partners to an online questionnaire, inquiring which industries they worked in and which consulting firms they held in high regard (excluding their own). A total of 1,207 partners completed the survey in November and December of 2016. The effort produced a long list of consultancies in 32 business categories, ranging from oil and gas to human resources.

Next, Statista used a market research firm to find and survey 1,100 business executives who had worked with the consultancies on the list. This “client survey” asked the executives which industries they worked in, and then prompted them to recommend the best consulting companies in those sectors. 1,100 executives filled out the survey this past January. Statista then identified the firms that received a disproportionately high number of recommendations in each category.

In each industry and functional area, consultancies were then sorted into starred categories according to the number of total recommendations received from colleagues and clients. Consultancies are alphabetized within each starred category. Those with very few recommendations were excluded from the list.

To view the complete list of America’s Best Consulting Firms for 2017, click here.

About Insight Sourcing Group

Insight Sourcing Group is the largest boutique consulting firm in North America focused exclusively on Strategic Sourcing and procurement-related services. The firm has developed a reputation for the collegiality and high caliber of our team, our tremendous focus on client results, our entrepreneurial and innovative approach to the space, and for our ability to consistently deliver strong outcomes.

Founded in 2002, the firm works with senior executives and procurement leaders to accelerate Strategic Sourcing savings, increase Spend Visibility, provide category intelligence, and implement procurement best practices. Insight Sourcing Group has worked with hundreds of corporate clients of all sizes and over 50 Private Equity firms.

Typical client results include 20% average savings per indirect spend category, 5 – 15% for direct spend categories, 400 – 600% first-year return on investment, and project payback periods measured in months.

Inc. magazine has ranked Insight Sourcing Group among the fastest-growing private companies in America every year since 2008, making it one of the few firms to be listed 9 years in a row as of 2016. Insight Sourcing Group was also recently named the #1 Boutique Consulting Firm To Work For in the US in 2016 by Vault.

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Insight Sourcing Group Named “Provider to Know in Procurement” for 4th Straight Year

For the fourth straight year, Insight Sourcing Group has been ranked as a Top 50 Provider to Know in Procurement by Spend Matters.
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Spend Matters, a leading procurement analyst firm, ranked Insight Sourcing Group on its list of “50 Providers to Know in Procurement”

 
Atlanta, Georgia — May 25, 2017 —  Insight Sourcing Group announces that it has been listed on Spend Matters 2017 list of “50 Providers to Know in Procurement,” an annual list that identifies companies that continue to lead the charge on new procurement technologies and services that are driving innovation and changing the way enterprises do business.


 
“It’s difficult — and getting even more so — to make Spend Matters’ 50/50 lists, and we’re thrilled Insight Sourcing Group made it onto the 2017 Spend Matters 50 to Know list,” said Jason Busch, founder and head of strategy at Spend Matters. “This list is the product of intense, debate, discussion and refinement each year by our analysts. This year saw new coverage areas and increased competition among providers in existing segments. Insight Sourcing Group earned a deserved spot as one of the procurement providers worth knowing in 2017.”

This year marks the fourth consecutive time Spend Matters has ranked Insight Sourcing Group on the 50 to Know list.

“We are excited to be listed among Spend Matters 50 to Know list for both our strategic sourcing consulting firm, Insight Sourcing Group, and our award-winning spend analysis expert-driven SaaS-solution, SpendHQ. To be recognized for the fourth year in a row by a leading procurement analyst firm such as Spend Matters is a testament to the hard work and dedication we have for leading the charge of innovation in our field,” said Tom Beaty, CEO, and founder of Insight Sourcing Group and SpendHQ. “We have seen extraordinary growth over the past three years, and we look forward to continuing to offer our unique solutions that deliver tremendous value for our clients and around the world.”

For the full 2017 rankings, click here.

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[BLOG] 5 Strategies to Maximize Your Office Equipment Savings

5 Strategies to Maximize Your Office Equipment Savings by Morgan Doty, Insight Sourcing Group’s office equipment subject matter expert If Office Supplies is a category that you commonly source, the…
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5 Strategies to Maximize Your Office Equipment Savings

by Morgan Doty, Insight Sourcing Group’s office equipment subject matter expert

If Office Supplies is a category that you commonly source, the five tips below will help you maximize your savings and drive the most value when sourcing this category.

  1. Leverage your spend. Office Equipment and Business Services pricing is driven by volume more than any other variable. The ability to leverage the combined spend of over 100 members (via a group purchasing or consortia program) is likely to help any company improve their pricing. In addition to improved pricing, consortium members benefit from improved agreement terms and detailed SLAs that ensure best-in-class service levels.
  2.  Develop and implement a demand management strategy. Once a competitive deal is in place, many companies stop and move on to the next project, overlooking the significant savings located just “below the surface”. By leveraging technology based tools, leading companies are able to implement various monitoring and controls to reduce demand and drive additional savings. For example, simply visibly monitoring users’ print activity can yield over 10% in additional savings. Similar cost reduction opportunities exist through defining policies on B&W vs. Color usage, Duplex vs. Single Side Printing, Print Release processes, and many other easily implementable protocols.
  3.  Optimize your fleet. It is important to not only consider whether you have competitive rates for your printing equipment, but also whether you have the equipment in place that is best suited for your environment. One of the fastest ways to drive savings is through the removal of desktop devices. Due to poor efficiency and high toner costs, desktop printers are cost prohibitive to use and maintain. Security tools available on more cost effective Multi-Function Devices (MFDs) are able to reduce the necessity of most desktop devices.
  4.  Evaluate opportunities to insource print. With improvements in production printers leading to higher quality and lower costs, clients are often surprised at the results of a make vs. buy analysis on their outsourced print. In addition to a reduction in print costs, additional savings are available through an elimination of rush charges and obsolete inventory as clients can move to a print on-demand model for much of their previously outsourced print.
  5. Identify opportunities to improve adjacent processes. In addition to equipment and related services, consortium members have access to competitive pricing on things like Records Management, Accounts Payable Solutions, Mail Center Services, Managed IT Services, Document Workflow, and many more. Services and solutions in these areas can help to drive benefits through increased efficiency, reduced print, and improved service levels.
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HOW TO: Generate a List of Your Company’s Non-Core Buyers

Identify Specific Buyers That Are “Offenders” Against Core List Compliance  One of the key components of driving a strong office supplies program is maintaining strong Core List compliance. But how…
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Identify Specific Buyers That Are “Offenders” Against Core List Compliance

 
One of the key components of driving a strong office supplies program is maintaining strong Core List compliance. But how can you identify the specific buyers within your organization that are “offenders” against this KPI? Utilizing Insight Sourcing Group’s Category Management tool makes this task a snap. Here is a step-by-step guide on how to utilize the tool to give you a listing of your Noncore buyers.

 

Step 1: Log In
Start by visiting www.spendhq.com/login and enter your login credentials.


Step 2: Open the Power Filter™
In the top right-hand portion of the screen is a dropdown arrow for the Power Filter.  Click the red arrow and select “New Filter” from the menu.


Step 3: Filter on Noncore Buyers
Once the Power Filter is open, select “Pricing Tier” from the “Your Dimensions” column on the left side of the Power Filter. Now on the right side “Pricing Tier” selection menu, simply click “(Deselect All)” and then select “Noncore” – you should now only see a checkmark next to the Noncore selection. Finally, select the “Save New & Apply” button in the bottom right-hand corner of the Power Filter.
PRO TIP: As an added bonus, you can name this filter to quickly access it again later.  Give it a title like “Noncore Buyers” in the box provided at the top of the Power Filter.

PRO TIP: As an added bonus, you can name this filter to quickly access it again later.  Give it a title like “Noncore Buyers” in the box provided at the top of the Power Filter.


Step 4: Noncore Buyers Listing
The final step of the process involves scrolling down the Dashboard tab to the Compare / Metrics / Maverick Spend table.  In the leftmost column heading is a dropdown menu.  In this area, select “Buyer Name.”  This provides a listing, in descending order, of the top Noncore Buyers across your organization. Don’t forget that you can select any buyer’s name on this page to flip to a buyer-specific page with all of the Noncore items that this user has purchased.

From here, all emails, phone calls, or discussions with these users can drive demonstrable incremental value for your organization.  4 simple steps to a better managed office supplies category – all with the help of Insight Sourcing Group and the Category Management tool!

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New VP to Lead Accelerated Growth of Firm’s Consortia Business

Insight Sourcing Group is excited to announce and welcome Jay Black who has joined the company as Vice President of its Consortia Practice.
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Insight Sourcing Group Names Jay Black as Vice President of GPO Practice

 
ATLANTA,  Georgia  — April 5, 2017 — Insight Sourcing Group, the largest boutique consulting firm in North America focused on cost optimization and procurement-related services, is excited to announce and welcome Jay Black who has joined the company as Vice President to lead its rapidly-growing consortia business.

“A consortia strategy is a valuable asset for any procurement organization looking to drive rapid savings in targeted spend areas,” said Tom Beaty, CEO and founder of Insight Sourcing Group.  “We’re excited to have Jay on board to help guide this rapidly growing sector of our business. He has an incredible track record of helping companies of all sizes implement and deploy group purchasing programs, and I know he will deliver the same success for Insight Sourcing Group’s customers.”

“I am incredibly excited to join the leadership team at Insight Sourcing Group and energized by the market opportunity resulting from the strategic investments, innovation, and client-centric execution inherent in this organization,” said Black. “Specific to group purchasing, we are uniquely positioned to deliver a best in class product that delivers long term value for our clients and supplier partners through the integration of our already successful GPO and the award winning spend visibility and category management powered by SpendHQ.  Couple this with our strategic sourcing, procurement transformation, and enterprise energy solutions, and you have something very special and relevant that fuels our clients’ success.”

Jay has over 16 years of experience in value creation for his clients.  He joins Insight Sourcing Group from CoreTrust, a group purchasing organization (GPO) for large corporations and private equity firms with multiple enterprise portfolios, where he served in both domestic and international operations roles.  Prior to CoreTrust, he managed the partnership between Sprint and some of the countries largest healthcare providers, leveraging GPO relationships and implementing cost-reduction measures.

To learn more about the consortia programs offered by Insight Sourcing Group, click here.

About Insight Sourcing Group

Insight Sourcing Group is the largest boutique consulting firm in North America focused exclusively on Strategic Sourcing and procurement-related services. The firm has developed a reputation for the collegiality and high caliber of our team, our tremendous focus on client results, our entrepreneurial and innovative approach to the space, and for our ability to consistently deliver strong outcomes.

Founded in 2002, the firm works with senior executives and procurement leaders to accelerate Strategic Sourcing savings, increase Spend Visibility, provide category intelligence, and implement procurement best practices. Insight Sourcing Group has worked with hundreds of corporate clients of all sizes and over 50 Private Equity firms.

Typical client results include 20% average savings per indirect spend category, 5 – 15% for direct spend categories, 400 – 600% first-year return on investment, and project payback periods measured in months.

Insight Sourcing Group offers consortia programs for Office Supplies and Janitorial Supplies, Office Equipment and Advanced Services, Auto Rentals, and Maintenance, Repair, and Operations (MRO) Supplies.

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AJC Names Insight Sourcing Group a Top Workplace in Atlanta

The Atlanta Journal-Constitution has named Insight Sourcing Group one of the top places to work in Atlanta for the fourth consecutive year.
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Insight Sourcing Group Lands #4 Spot in Atlanta Journal-Constitution‘s 2017 Top Workplaces Survey

 
ATLANTA, Georgia — March 27, 2017 — Insight Sourcing Group, an Atlanta-based boutique consulting firm focused on cost optimization and procurement-related services, announced today that it has been named one of the Atlanta Journal-Constitution’s Top Workplaces in 2017.  The firm is ranked as the #4 top company with less than 150 people, making this Insight Sourcing Group’s third consecutive year ranking in the top 5 small workplaces.

In addition to being named the #4 workplace, the firm also received special recognition for showing that efficiency, quality, and excellence in execution are hallmarks of the company.

“We are honored to be recognized as one of Atlanta’s Top Small Workplace,” said Tom Beaty, CEO of Insight Sourcing Group. “We have built a unique culture that attracts and retains great people. We are humbled by the fact that our turnover is well below the consulting industry average of 15-25% per year, and in fact last year, our voluntary turnover was 0%. After many years of high staff retention, we have many team members who joined us out of college five, eight, and even 10 or 11 years ago and remain with us. For a firm whose product is its people, this consistency and depth of expertise brings extraordinary value to our clients.”

“Despite receiving awards like this one, we always strive to enhance and build upon our culture and this year is no different,” Beaty said. “We have recently launched an effort to create a world class leadership development program for our team members that will be unique among firms of our size and innovative compared to larger firms.”

Almost 60,000 metro workers participated in the survey. They were asked to respond to a set of statements using a seven-point Likert scale. Each statement was tested to ensure a high correlation with how metro employees rate their workplaces. This was calculated by correlating the statement responses to a control question that asked each employee to rate his or her workplace on a scale of zero to 99.

The resulting top 150 list consists of 25 large companies (500 or more employees), 50 midsize companies (150-499 employees) and 75 small companies (149 or fewer employees). Another 15 companies are honored as WorkPlace Achievers — they scored high enough to meet national standards but not high enough to crack the top 150.

To view the complete list of Atlanta’s Top Workplaces, click here.

About Insight Sourcing Group

Insight Sourcing Group is the largest boutique consulting firm in North America focused exclusively on Strategic Sourcing and procurement-related services. The firm has developed a reputation for the collegiality and high caliber of our team, our tremendous focus on client results, our entrepreneurial and innovative approach to the space, and for our ability to consistently deliver strong outcomes.

Founded in 2002, the firm works with senior executives and procurement leaders to accelerate Strategic Sourcing savings, increase Spend Visibility, provide category intelligence, and implement procurement best practices. Insight Sourcing Group has worked with hundreds of corporate clients of all sizes and over 50 Private Equity firms.

Typical client results include 20% average savings per indirect spend category, 5 – 15% for direct spend categories, 400 – 600% first-year return on investment, and project payback periods measured in months.

Inc. magazine has ranked Insight Sourcing Group among the fastest-growing private companies in America every year since 2008, making it one of the few firms to be listed 9 years in a row as of 2016. Insight Sourcing Group was also recently named the #1 Boutique Consulting Firm To Work For in the US in 2016 by Vault.

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[BLOG] Procurement Analysis Drives Post Merger & Acquisition Savings

Procurement Analysis Drives Post M&A Savings by Bill Pumphrey, Vice President at Insight Sourcing Group Procurement—the process of leveraging deep data analytics and a disciplined strategic sourcing approach to optimize…
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Procurement Analysis Drives Post M&A Savings

by Bill Pumphrey, Vice President at Insight Sourcing Group

Procurement—the process of leveraging deep data analytics and a disciplined strategic sourcing approach to optimize the purchase of goods and services—is often an area of under-investment during the first steps of the M&A process. When two companies merge or come together through acquisition, optimizing procurement synergies can be one of the most important strategic levers for driving rapid and long-term EBITDA improvement.

Typically, a merger or acquisition will increase the combined companies’ volumes, and therefore leverage, for common expenditure areas. Even two companies in different industries will have similar indirect expenditures, such as spending on selling, and on general and administrative areas common to most companies, such as technology, office products and temporary labor.

Even if both companies currently have world-class pricing and contracts, a material increase in volumes will typically drive significant savings opportunities. In some cases, the combined volume will elevate the new entity into a “national account” or other higher status with the supply base, which often opens the door to more aggressive pricing and better service.

When two well-known mattress manufacturers merged through a private equity transaction, an apparent “synergy homerun” was complicated by the fact that the two companies had different manufacturing processes that were not going to be integrated in the near term. One had an automated stapling process and the other used labor with stapling power tools. Both utilized the same global supplier although they bought different fastener products (stock keeping units).

Through a rigorous sourcing process, the combined entity saved more than 10 percent on this strategic multi-million-dollar category with no change in supplier, service or quality, and both continued to buy unique products. By prioritizing this as a first-wave effort, the savings generated an early win and helped fund other mid-term strategies, such as sales and marketing integration. Unfortunately, many companies struggle internally with procurement optimization due to three major challenges:

  1. Poor spend visibility. Procurement data is surprisingly poor and many companies have a limited understanding of their annual expenditures, except for the largest areas. As a result, self-reported volume figures are notoriously inaccurate, resulting in a risk of understating volumes and sub-optimizing savings, or of overstating them and creating a negative relationship with the selected suppliers. The issue lies in the fact that most CFOs will look at the relevant GL codes to report spending volume. However, general ledger coding does not align well with procurement needs because it does not capture all spending for specific sourcing categories.There is no way to effectively manage expenditures you cannot see. The right way to enhance spending visibility is to take a relatively simple accounts payable report from each company and organize the vendors into categories that reflect the supplier markets.This produces clear category-level data that enables development of a full Ebitda improvement strategy and road map.If this project is performed manually, this can be a very time consuming and a monumental task that produces less than optimal results. The highest levels of spending visibility are best achieved using a software automation tool that is specifically designed to consolidate and normalize spending data from multiple financial systems, and then converting GL code-orientated data to sourcing-ready data.
  2. Lack of understanding related to detailed current spend. Many companies lack insight into line item costs and the mix of products or services they use with their suppliers. Achieving optimal results requires a detailed analysis of target expenditure areas including quantitative and qualitative aspects. As a result, a whole host of benefits accrue, including the ability to level the playing field with suppliers who spend a lifetime in their industry.
  3. Internal resistance and organizational misalignment.  Even if senior executives are well aligned with the equity sponsors in an M&A transaction, the greatest obstacle for results-focused sourcing is often resistance from mid-level stakeholders. These managers may be comfortable with current suppliers, enjoy leading the selection process or have subjective beliefs about why change would be detrimental. Barriers are thrown up to senior leaders who do not have the analytical data to verify or overcome these technical objections, elevating the sense of project risk.The key to success is to bring objectivity and a thorough analysis to an otherwise emotional or anecdotal argument. Executives need clear decision support data to navigate internal challenges. Most internal stakeholders want to do the right thing, despite initial fears and concerns. A process that brings these concerns to the surface early, makes them heard and works to address them will often win over reluctant managers. If not, the overwhelming weight of facts and logic is difficult for them to argue against without looking unreasonable.

There are several other notable challenges but all can be overcome using a robust solution that engages the stakeholders from each company and allows them to be part of the decision-making process. A best-in-class process can also overcome the supplier skepticism that sometimes accompanies new programs and can otherwise create sub-optimal results.

Companies should not overlook this opportunity to drive improved earnings through strategic sourcing and procurement transformation, especially post-M&A, when the timing is optimal for a significant improvement. The recommended approach is to partner with a company that has extensive experience and is focused exclusively on strategic sourcing and procurement transformation.

The level of procurement talent and sophistication varies widely by company, and many organizations lack the expertise to deliver rapid value from a procurement perspective. Even if the most strategic procurement leaders are already in place, they often struggle with project overload, or they lack the right team or tools to optimize procurement within an M&A environment. In most cases, choosing the right consulting partner to bring dedication and expertise will rapidly accelerate the use of procurement as a strategic lever within an M&A environment.

Companies can use the following approach to accelerate procurement-related synergy capture:

  1. Perform a spend analysis for each separate entity to provide visibility to quickly understand the spend profile for each company. This low-impact effort creates a clear framework for opportunity evaluation because each company can be compared, which ultimately will help identify and develop strategies for savings capture and create a clear framework for opportunity evaluation.
  2. Gather supplier contracts for both entities for targeted spend areas to perform an in-depth assessment that identifies:
    • Contracts and constraints that might hinder near-term consolidation
    • Pricing and payment structures
    • Performance and service level requirements
    • The ability to assign contracts
    • Commitments, penalties and relevant complexities
  3. Use a side-by-side analysis to immediately reveal leverage opportunities. When combined with the results of the contract evaluation and client input, an organization will better understand:
    • rioritization of post-merger opportunities and quick hits
    • Estimates of savings and target timelines
    • Sourcing strategies by opportunity
    • Potential contract concerns and challenges
  4. In conjunction with the side-by-side assessment, assess each company’s procurement organization, people, process and technology to help a strategic partner recommend and execute best practices.

One of the key reasons for selecting a partner is to obtain and leverage the key market intelligence and industry-best service levels from a wider and deeper level. This reason alone will drive a significant difference in the return on investment for the earnings improvement program.

Whether you choose to implement these strategies alone or with the help of a strategic partner, focusing on procurement optimization is guaranteed to be the fastest way to drive Ebitda-related earnings improvement.

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[BLOG] 3 Ways to Reduce Your LTL Freight Costs in 2017

3 Ways to Reduce Your LTL Freight Costs in 2017 by Ryan Heath, Insight Sourcing Group’s transportation sourcing expert If one of your goals for 2017 is reducing your LTL…
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3 Ways to Reduce Your LTL Freight Costs in 2017

by Ryan Heath, Insight Sourcing Group’s transportation sourcing expert

If one of your goals for 2017 is reducing your LTL freight spend, and your plan for accomplishing it is issuing a RFP in hopes that applying competitive pressure to your incumbent carriers will result in them reducing rates, you may want to reassess your situation. “Pricing discipline” has been a rallying cry for LTL carriers for 5+ years now after 2010’s price war left many carriers with an uphill climb back to acceptable profitability levels. So when your sales rep for your favorite carrier takes your request for lower rates back to his or her pricing group, the rep is more likely to come back with a price increase than a decrease.

So what are cost-conscious procurement and supply chain professionals to do?

  1. Pursue carrier flexibility. Bidding out your LTL business every year is a good idea, aligning your freight with the carriers that find it most attractive at any point in time. However, this presumes some carrier flexibility. So start educating your team on carrier capabilities before your RFP. Start challenging carrier shibboleths in your organization – “That carrier is terrible; they are slow and they always damage freight! We can’t afford to move away from our current carrier.” – with data and facts about performance – “Actually, their transit times are the same or better in most of our shipping lanes, and their claims for damages look about the same.” Because you may have to change carriers to save money.
  2. Make sure you are utilizing regional carriers to the fullest extent possible. Regional carriers typically offer a lower price point with transit times often equal to or faster than national carriers. Using a national carrier on regional shipments typically leaves money on the table. At Insight Sourcing Group, we have seen cost gaps of 30% or more between competitive regional and national carriers. So make sure you are taking full advantage of regional carrier offerings.
  3. Cost-optimize shipment routing. First of all, you should have more than one LTL carrier. If you don’t, you are likely not taking advantage of the fact that carriers tend to have some geographical pockets that are more competitive than others. If you just have one carrier, you will never know.

But if you have multiple carriers, you must determine how to best use each. The easiest way to cost-optimize routing is to utilize a technology solution into which you can load all of your pricing agreements, and it shows you all pricing and transit time options on a shipment by shipment basis. All that remains is instilling the discipline of tendering shipments to the lowest cost approved carrier.

Many shippers, however, do not have technology like this, so a routing guide is developed that tells a shipper which carrier to use based on shipment origin and destination geography. However, in order to generate the routing guide, a comparison between carriers needs to be conducted that takes into account the varied LTL pricing factors: Tariff Discounts, Minimum Charges, FAKs, Fuel Surcharges, Accessorials, and Transit Times. A robust comparison, which requires a deep dive into historical data, is needed for a robust routing guide. Many shippers’ routing guides only account for Tariff Discounts, not realizing how often the best priced carrier does not have the best discount. Judging the true low-cost option is only possible when you have a solid handle on your shipping patterns. A recent client discovered they could reduce costs 8% by making some simple routing adjustments.

The key takeaway here: spending the time to understand your shipping profile and modeling your carriers’ pricing structures against that profile can lead to significant cost reduction.

For more information on how to reduce your freight costs, please contact us.