Capital Equipment Manufacturer Uses Procurement Improvement Process to Leverage Growth and Reduce Costs 5%

Client Context

A private equity-owned manufacturer of capital equipment was experiencing rapid growth through acquisitions and organic expansion. While recognized as the premier supplier in its industry, cost efficiency and service quality were essential to maintaining market leadership in a highly competitive environment with low barriers to entry.

Despite acquiring multiple businesses, the company had not integrated procurement processes across facilities, resulting in missed cost synergies. The client sought to leverage total enterprise spend, professionalize procurement operations, and capture savings through strategic sourcing and supplier rationalization.

Key Challenges

• Decentralized procurement with low supplier consolidation across facilities
• Procurement perceived as a tactical function rather than a strategic driver of cost reduction
• Inconsistent application of commodity cost trends across purchased components
• Limited coordination among procurement teams at different facilities
• Weak contract language, lacking cost reduction commitments and performance improvement clauses
• Lack of a structured risk mitigation plan, particularly critical during global supply chain disruptions

Approach & Key Success Factors

1. Deep Dive Analysis & Opportunity Identification

EFESO conducted a four-week comprehensive analysis to uncover procurement inefficiencies and define a roadmap for improvement. Key findings included:

• Supplier Rationalization: Identified opportunities to consolidate supplier spend
• Strategic Procurement Approach: Shifted from ad-hoc purchasing to structured enterprise-wide sourcing
• Commodity Pricing Leverage: Applied cost-saving strategies across all purchased components

2. Procurement Transformation & Implementation

• Developed a coordinated sourcing strategy across all sites, assigning procurement leads to specific commodities
• Aligned strategic and tactical procurement functions, clearly defining roles and responsibilities
• Created a commodity management framework to ensure spend consolidation and supplier negotiations were effectively managed
• Strengthened supplier contracts by integrating cost reduction, performance improvement, and most-favored-nation clauses
• Implemented a risk mitigation framework to anticipate and address supply chain disruptions during the COVID-19 pandemic

3. Performance Tracking & Continuous Improvement

• Designed metrics and dashboards to track savings, supplier performance, and procurement efficiency
• Established a sustainable procurement process that the client could use for ongoing cost optimization

Results

Over 5%

Cost reduction in material spend

Optimized 

Supplier base, consolidating multiple vendors to improve pricing leverage

Significant cost savings through:

• • Managed competition for raw materials (largest contributor)
  • Split manufacturing (make vs. buy strategy)
  • Supplier renegotiations and replacements

Developed

a standardized procurement process, ensuring future cost reductions and procurement excellence

By shifting procurement from a tactical function to a strategic lever for cost savings and risk management, EFESO enabled the client to achieve sustainable competitive advantages while continuing its growth trajectory.