Procurement Consulting

Procurement that Unlocks Enterprise Value

Many industries vigilantly manage their internal cost structure (e.g., people cost, infrastructure, etc.) but do not exercise that same diligence on external costs. These external costs comprise direct materials, indirect materials, and necessary services to provide for their end customers. Strategically managing these costs has a direct impact on the P&L and enables business expanding investments.

For some companies, this requires building a procurement capability that is aligned with the company strategy. Even organizations that have the capability may still be leaving considerable value in the hands of their suppliers versus their shareholders. How? Suppliers are driven to expand margin too which is often is at the expense of the buyer.

The consequence is uncompetitive cost structures (price of goods/services), trapped cash (less than industry payment terms), and potentially forcing the buyer to cut their own people cost to remain profitable. Deploying a targeted procurement action can help restore value back to your enterprise.

L.E.K has a proven approach to accelerate cost reduction and sourcing capability expansion.

Our approach to procurement is characterized by:

• Rigor: We deploy a 7-step sourcing process that is designed to be client engaging, data based, and focused on areas of greater opportunity and importance. 

• Strategic: We combine efforts with our clients to get the tactical items done and structural, long-term value.

• Speed to value: We emphatically believe that some categories of spend lend themselves to quick wins and should not wait until the end of the engagement to deliver value.

• Tool agnostic: The use of tools is selected based on the client situation and we can recommend tools or use existing platforms the client is more comfortable with. 

• Self-funding outcomes: Our sourcing delivery is designed to offset any costs to achieve and provide a meaningful multiple of return.

• A delivery plan with implementation support: We use our findings on improvement opportunities to develop a delivery plan which can be executed by the client or with L.E.K support.

• Track record of success: We consistently generate savings in the range of 10-20%. 

We drive procurement solution in the areas of:

• Procurement organization & operating model – Assessing current state and developing the future state design

• Cost take-out – Reduce cost of direct and indirect spends through specific sourcing levers

• Supplier risk & life cycle – Develop programs to maintain supplier risk and overall supplier performance