Working with Newco, formerly part of a larger organisation

16th November 2014

The background – the client is a newly formed company, backed by Private Equity investors, who were divested by the global parent company due to a change in how technology was driving the industry sector. As part of a global business, purchasing within Europe was centralised with an established dedicated team responsible for the ongoing management of suppliers of goods and services. It was a widely held belief that service levels, quality and pricing were at optimum levels.

The issue – The client, aware of the break from the parent, was extremely worried about the ability to maintain theprice and service performance levels they enjoyed as part of the wider group. This was exacerbated by their perceived lack of a purchasing department to negotiate and manage the suppliers of goods and services on an ongoing basis.
An additional concern was the potential impact of any price increases on the re-sale value of the business should the investors wish to divest this from their portfolio.

The solution – Lime Associates was engaged to review historical and current purchase practice in order to identify the areas of weakness and also to identify opportunities for cost reduction and process improvement.
Following a two day review of activities, a report prioritising purchasing initiatives was submitted to the management team who commissioned Lime Associates to execute the findings in the report.
Products, goods and services were quickly categorised and plans developed to address each area of expenditure. With the use of leverage, new suppliers (including some low cost sourced options), cost modelling and supplier relationship management, suppliers were engaged in a way that that they had not been previously.
In addition, the staff involved from the client’s team were given training to continue the best practices implemented as part of the process.

The outcome – supply of the critical service provided by the client continued. Through a simplification of the purchasing process and good negotiation, the client was able to see a significant drop in expenditure and the investors a large increase in the value of their holding. Service levels improved along with quality, the benefits of which are sustainable and long term.

Categories: Case Studies, Cost Reduction, Cost Control, Start Ups