Project at a glance
Client: German consumer goods and retail company
- Preparation and execution of a tender for product packaging.
- Product group and demand analysis, design and setup of the tender as well as project management, preparation of documents and evaluation procedures incl. status and final reports as well as decision documents for the implementation of the tender, execution of the award negotiation and presentation of the award recommendation
- The tender was carried out in the product group packaging material - material folding boxes and trays
- The objectives of the tender in decreasing order were: Price reduction, maintenance of the supply, service and product quality, as well as process optimization by bundling the requirements to one supplier, if possible, at the Eastern European location of the customer.
- Not all information and data could be provided by the customer in an optimal way, e.g.: forecasts, invoice insight or contracts were missing.
- At the same time, the customer was open to new ideas, concepts and approaches.
Project success: 17% cost savings due to bundling effects from formerly three to one provider
In contrast to the customer's standard procedure, the scope, design and method of the tendering process were completely redesigned. For example, a price structure analysis was carried out. This ensured optimum market transparency and thus an objective basis for negotiation in a highly price-sensitive supplier market. At the same time, the specifications were revised and the quantities for the tender were made more flexible. As the customer did not have a forecast and capacity expansions at the Eastern European location were expected due to the construction of further production facilities, the tender was carried out using the scenario technique. This provided the basis for a comprehensive, flexible and future-oriented award decision.
By expanding the supplier base from 11 to 29, now including international suppliers, it was possible to find suppliers close to the plant. In addition to the required high product and process quality, these suppliers are able to undercut the bid prices by up to 20% thanks to an optimum cost structure in production and logistics compared with the previous suppliers. It was also possible to achieve the goal of bundling what were formerly three local suppliers into one international supplier. It is interesting to note that the recommendation and choice fell on one of the previous suppliers, as it was prepared to invest in both capacity expansion and business expansion to Eastern Europe and thus in internationalization. Thus, the customer can use existing know-how as well as investments already made in the supplier. At the same time, he minimizes the risks and start-up costs associated with a change of supplier and supplier management. This also justifies the decision not to award the contract to the lowest-priced supplier.