€180M Cost Savings Strategy

Client Challenge

An acquired business unit within the company had not yet been fully integrated into the procurement organization. While the procurement categories between the units did not necessarily overlap, the company anticipated significant synergies from fully integrating the business unit, given the total annual procurement spend exceeding €21B. 

The parent company had a centralised Procurement organisation while the new Business Unit was rather decentralised. In addition, teams were very busy with the integration and managing the daily business, which was hit by significant issues and risks. The challenge was to find and realise savings opportunities quickly.

H&Z Approach

Utilizing our established methodology, H&Z collaborated closely with cross-functional customer teams, procurement experts, and consultants to develop a comprehensive Value-Creation Plan (VCP).

The customized approach encompassed the entire process, from identifying potential savings to implementing selected measures: 

• Conduct category interviews with category managers and projects 
• Execute lever workshops including cross-functional partners 
• Conduct should-cost calculations, CVE workshops and analyse technical solutions 
• Define savings measures in DI 1/2 & quick wins including profit impact 
• Define detailed roadmap for implementation including resources needed
• Drive measures to DI3 and higher including negotiations, supplier optimisation, and quick wins 

Results

In close collaboration with customer teams, H&Z

• Assessed purchase volume of over €20B to determine opportunities and overlaps in expenditure
• Developed synergy measures for direct material, indirect materials, and logistics
• Identified more >400 savings measures
• Developed a value creation plan with savings exceeded €180M on top of existing measures:
  • Direct Material: >120 measures at >€134M           
  • Indirect Material: >200 measures at >€30M       
  • Logistics: >30 measures at >€18M
• Exceeded the savings goal by >20% compared to the plan
• Implemented over 30 short-term measures, resulting in savings of >€32M, leading to an immediate P&L impact
• Prepared the further implementation of  measures identified until FY26:
  • Handed over measures to those responsible
  • Prepared an implementation plan for each measure
  • Added measures to the internal tracking tool       
  • Assessed capacity in Procurement/SQD/CVE for measure maturation

Collaborating closely with the client, H&Z emphasized cross-functional cooperation through workshops, in-depth sessions, and brainstorming to exceed the targeted savings.

H&Z leveraged its extensive expertise across a wide range of categories, thoroughly reviewing the situation and crafting tailored measures for each specific category to achieve these results.