RaPP Case Studies : Company 1


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Company 1
Case client 1 is a manufacturer of pressed steel products for the automotive and electrical and consumer goods industries. Please click on one of the following subjects to view more information:

	The Issue
	The Solution
	Benefits

The Issue

As an SME they spend approx. £600K per annum on steel raw material. This steel goes into products, which are sold to UK markets and overseas. The export content is up to 40% via their customer.

Their European based customers are intending to pay in euro for their goods.

The directors believed they might not be applying best practice in the structure and activities in their purchasing function leading to loss of competitiveness in their purchase prices. They also needed to establish the potential to offset the exchange risk by paying for purchases in euro.

The Solution

1.	Conduct a RaPP Programme assessment of the purchasing process and spend. Present and implement a revised structure and spend strategy using best practice to maximise the buying potential of the company.
2.	Conduct a review of the existing Steel buying process and prices. Establish the competitive market prices, which could be available to the company. Establish the most efficient route to implementing payment in euro for steel.
3.	Conduct a ‘Purchase for the Business Plan’ programme to provide a structured approach to the purchasing process that directs all activity toward business plan objectives.

Benefits

1.	The RaPP analysis and new strategy for the spend identified savings of 5.6% which when applied to the turnover of the company would raise enterprise profitability by 56% across a number of categories including: a. Sub-contract finishing b. Tool making c. Consumables and factory expenses. d. Electricity and Gas expenditure where achieved reductions were 21% and 26% respectively.
2.	Steel price reductions achieved of 2.6%, which was an improvement of 43% on existing targets. This represented a 13% improvement in profitability. The UK source identified would be able to offer Euro payments to Case client 1 due to its own significant European supply base. A new JIT process was also developed to improve availability and optimise stock holding.
3.	A revised functional structure was implemented. A holistic purchase plan exists with targets and measures and task plans visibly displayed on the new team board in purchasing.


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