Testimonial 2

Delivering a 67% Unit Cost Reduction (and counting!!!) 

What we do…

Intro & requirement 

 

Alliance Procurement Solutions (APS) were approached by the longest running Fuel Cell (FC) company in the UKAdelan Ltd, to help them reduce the unit cost for one of their units, as they seek to leverage their future growth. 

 

It is a hugely exciting time for Adelan with the requirements for decarbonising our environment bigger and more important than ever. 

 

Adelan who invented the core microtubular solid oxide fuel cell (mSOFC) technology in 1992 have the technology to enable this to be delivered and are at the forefront of Hydrogen powered fuel cells. 

 

We met with Adelan on numerous occasions to understand their business and agree scope, which also included us recommending the best approach recognising the business needs.  Ultimately, Adelan’s objective is to achieve at least a 90% unit cost reduction. 

 

Our work 

 

Agreed to work with Adelan to strategically source, and make supplier recommendations for a range of critical components for their product. 

 

We worked with Adelan to agree potential sources and used our toolkits to engage those suppliers.  Whilst the overarching objective was to reduce unit cost, we also needed to ensure the suppliers were capable of meeting future demand.   

 

We can reference our 8 step strategic sourcing process from previous blog here?? 

 

Using our capability assessment process, which was part of our Request for Proposal (RFP), ensured suppliers ability to scale up to demand and maintain product quality was assessed, but equally ensuring a balance is maintained so as to not over-burden the suppliers. 

 

It was important to source not just on the cheapest supplier but the best all round supplier, and where possible preferring UK Manufacturing sources. 

 

We project managed the whole project, created detailed cost modelling and analysis which enabled us to recommend keep Adelan informed throughout the process. 

 

We facilitated all engagements with the suppliers, including site visits where required. 

 

The result 

 

Using our exceptional strategic sourcing process, and leveraging future growth we have worked with the recommended suppliers to reduce total unit cost by 67%.  But equally important, we have created a roadmap that will support further reduction to deliver 90% unit cost reduction in total, which will be underpinned through supplier collaboration. 

 

Our Customer said 

 

Gary Saunders, Chief Fuel Cell Engineer said, “APS have been very professional and thorough in the support they have provided.  They understood our requirements, and used their expertise to deliver what we needed.  Interfacing with me and my team when needed to ensure we were all aligned. 

 

Michaela Kendall, CEO said, “It was great to work with APS, who really got to understand our business and was able to translate our strategic goals into this key delivery milestone for our business.  They have been engaging and supportive right through the process, and have been a pleasure to work with.  They really have given us the right platform to grow our business, and we can’t thank them enough!” 

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Spend Analytics

Cost Reduction

Improvement Diagnostics

Mitigating the risk

What we do…

 

CASE STUDY

A Contract Electronics Manufacturing Solutions (CEM) provider based in Derbyshire, have dual sourced a key element of their supply chain to reduce a single source risk with the expert help of Alliance Procurement Solutions.

The CEM worked with their largest customer to identify a key supplier risk within their supply chain.  A simple what if scenario was used to identify the risk, “What would we do if that supplier could no longer supply us with these critical components?”  In other words, what if that supplier ceased trading, and what effect would that have on the business?

 

DEFINING THE KEY ISSUE

This led the CEM to create a simple work package; “How could we source these products and who from?”.  The primary objective was not about improving costs but establishing credible alternative suppliers who could take over the production of a group of components.  In fact, it was accepted that costs would probably increase by as much as 20%.

The CEM established that they needed additional expert resource to help them find a solution, recognising that their own processes and systems were not geared to supporting such a task.

OUR EXPERTISE

Alliance Procurement Solutions (APS), was engaged to help the CEM with this large and significant project.  APS established that the process of strategically approaching this work package, would require supporting them with the development of Request for Proposal (RFP) documents, Supplier Capability Assessments, and how to assess the proposals received from suppliers, which supplemented their existing quoting processes.

A key deliverable was to work closely with the Head of Procurement and Supply Chain to support the development of the team, embed strategic procurement processes as well as managing key communications with the business owner, Operations Director and their customer.

 

OUR WORK

APS used its extensive knowledge of the manufacturing supply chain to identify suppliers who could support the CEM’s requirements. Our experts also worked closely with key internal stakeholders such as engineering and customer account managers to understand their requirements, and then gain their buy-in to the strategy.

Once suppliers were engaged in the process using the tools above, we facilitated two Supplier Days.  These were crucial in enabling potential suppliers to discuss the project requirements further, and to physically see some representative components.

For more information – just call us today

For more information – just call us today

Subscriptions:

And how we do it…

A key element of the Supplier Capability Assessment is to understand some of the key factors in the decision making process.  It is important to recognise that was not about sourcing just on price.  Instead, we looked at other factors including delivery performance, quality performance, customer returns process, contract review processes, evidence of supplier capacity planning and ability to deliver.  It was also important to understand the suppliers’ values and policies and how these were aligned with Kingfield’s.

Supplier visits were led by APS, with the CEM in attendance. Once proposals were received to establish a supplier’s manufacturing capability, assess their operations practices, we could then move to start the process of addressing any gaps in their capability assessment scoring.

Naturally this led to detailed negotiations with all suppliers to ensure Win-Win scenarios were explored at all times.

 

THE RESULT

After three months, a final supplier recommendation was proposed to all key stakeholders which was based on a balanced and unbiased assessment of each suppliers scoring.

The new sources have greater all-round capability, improving delivery performance and with the added bonus of achieving a cost neutral position for the CEM and their major customer.  Based on expectations, this is the equivalent of 20% cost avoidance!

All this was underpinned with a clear implementation plan which detailed a plan for every part, ensuring that the risk of no inventory is negligible.

This strategy of spreading components across a few suppliers means another single source risk is not created, work is spread evenly so as to not overload a supplier, enabling a greater chance of success for them, and will enable greater supplier collaboration as longer term relationships are established.  In simple terms, the risk of supply chain failure is greatly reduced and opportunities to reduce costs on other components greatly enhanced!

 

 

WHAT OUR CUSTOMER SAID

Head of Procurement and Supply Chain at the CEM said:-

“APS really worked very closely with me and embedded themselves as part of the team to deliver this project.  Their expert knowledge of the manufacturing supply chain, and the ability to support us in improving our procurement process capability has been invaluable.  They have worked with me to help develop my team, and ultimately deliver an outstanding result for the project.  Our company owner and largest customer are delighted with the work APS have delivered”

Book a free no obligation discovery session online with us now!

Book a free no obligation discovery session online with us now!

call us today on
0330 311 2601