Timeframe: April 2009 – May 2010
Approach: Lean Six Sigma (DMAIC)
Scope: Global Procurement, Inventory, Vendor Management, and Logistics

Executive Summary

A global corporation undertook a comprehensive transformation of its decentralized supply chain organization to regain operational control, modernize outdated systems, and eliminate excessive third‑party dependency. Using a Lean Six Sigma DMAIC (Define, Measure, Analyze, Improve, and Control) approach, the organization redesigned processes, modernized ERP functionality, strengthened governance, and rebuilt internal capabilities. The initiative was delivered on time and within budget and generated more than USD $30 million in first‑year savings, while significantly improving cycle time, visibility, and compliance.

Business Challenge

The Global Supply Chain organization relied on highly manual, antiquated processes resembling mid‑1980s practices. Core procurement activities—including RFQs, bid analysis, and purchase order awards—were decentralized and lacked effective oversight. A third‑party alliance partner controlled pricing, delivery dates, and inventory management across five global regions, adding multiple management fees and limiting transparency.

Additional challenges included inaccurate global inventory visibility, poorly governed catalog data, fragmented ERP deployment, insufficient vendor master data, and logistics operations that routinely incurred excessive customs duties. These issues drove unnecessary spend, long cycle times, and reduced accountability.

Key Findings

Analysis revealed that alliance partner pricing exceeded market rates and that management fees alone doubled the effective cost of procurement operations. Outsourced procurement and catalog activities cost more than insourcing with appropriate staffing. Limited logistics visibility resulted in monthly customs storage charges frequently exceeding USD $100,000, while ERP functionality was insufficiently deployed to support global supply chain requirements.

Solution

With executive sponsorship and funding, the organization executed a multi‑pronged transformation:

• Technology Enablement: Implemented a web‑based sourcing cockpit supporting RFQs, bid analysis, bid awards, and automated purchase order generation, accessible to internal teams and approved suppliers.
• Process & Data Redesign: Established a governed catalog schema, cleansed and blocked redundant data, and introduced cross‑referencing by form, fit, and function to prevent duplicate purchasing.
• ERP & Inventory Modernization: Redeployed ERP inventory functionality and eliminated legacy systems across multiple sites.
• Organizational Reset: Reduced outsourced catalog headcount, rebuilt vendor master data to support procurement requirements, and hired an experienced software configuration and administration team.

All improvements were delivered within the approved budget and timeline.

Results & Impact

The transformation delivered immediate and sustained value:

• USD $30+ million in first‑year savings following dissolution of the alliance partner
• Average days to procure reduced from over five to on average three days
• Fixed‑price, fixed‑delivery contracts exceeded 55% of catalog purchases
• Procurement efficiency gains reduced staffing needs by more than five FTEs
• Customs duty storage charges reduced to zero through improved logistics controls
• Establishment of a Free Trade Zone eliminated temporary duty charges for U.S. imports
• Global inventory visibility enabled redeployment of slow‑moving and excess stock
• Enhanced KPI and vendor reporting improved governance and performance management

Executive Takeaway

This case demonstrates that reclaiming ownership of the supply chain—supported by disciplined process redesign, data governance, and targeted technology investment—can deliver rapid financial returns, improved control, and long‑term operational resilience.