Case Study: Optimizing Chemical Manufacturing for Four Newly Merged Companies
When a new company was formed through the merger of four distinct chemical manufacturers, the new organization faced a common challenge: optimizing their newly combined raw material sourcing. To solve the problem, the company engaged Fisher Specialty Advising, in partnership with our partner company SC CHEM, to navigate this complex landscape, leveraging our expertise in supply chain redesign and global sourcing to unlock significant cost savings and improve efficiencies through contract manufacturing.
The Challenge
The new company, formed through a recent merger, needed to consolidate and optimize their fragmented chemical sourcing to reduce costs and improve efficiency.
The Process
Fisher Specialty Advising, in partnership with SC CHEM, was engaged to redesign the company's supply chain and consolidate their chemical sourcing. Our approach included:
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Spend Analysis: We conducted a thorough analysis of the raw material spend across all four legacy companies, identifying key chemicals, volumes, suppliers, and pricing. This revealed significant opportunities for consolidation and cost reduction.
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Global Sourcing Strategy: We leveraged our global network of chemical suppliers and SC CHEM's international sourcing expertise to identify potential cost savings through strategic global procurement. We looked beyond local suppliers to find the most competitive options worldwide.
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Supplier Consolidation: We developed a plan to consolidate the supplier base, reducing the number of vendors and increasing their purchasing leverage. This allowed for better negotiation of pricing and contract terms.
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Direct Import Program: For certain key chemicals, we implemented a direct import program, bypassing intermediaries and reducing costs. SC CHEM took on the responsibility of finding, vetting, and sourcing international suppliers, handling all the complexities of international trade.
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Contract Negotiation: We negotiated new contracts with key suppliers, leveraging its consolidated purchasing power to secure better pricing, favorable terms, and reliable supply.
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Supply Chain Integration: We integrated the new suppliers into its supply chain, ensuring smooth logistics, timely delivery, and consistent quality.
Key insights and results.
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Massive Cost Savings: By combining the purchasing power of the four legacy companies and leveraging our global sourcing capabilities, the FSA team found opportunities for massive cost savings on raw materials. Our partner SC CHEM became the primary supplier of five key chemicals, achieving significant price reductions.
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Improved Efficiencies: Consolidating the supplier base streamlined its procurement processes, reduced administrative overhead, and improved overall supply chain efficiency.
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Enhanced Purchasing Leverage: With a consolidated spend and fewer suppliers, the company gained significant leverage in negotiations, enabling them to secure better pricing and contract terms in the future.
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Access to Global Markets: Through the direct import program managed by our partner SC CHEM, the company gained access to global chemical markets and competitive pricing that would have been unavailable to the smaller, individual legacy companies.
