Direct Materials COE
We understand Direct Materials are the heart of a supply chain and any disruption can have significant consequences for an organization’s operations. The only way to mitigate this risk is through a proactive approach to managing these categories. Our Direct Materials Center of Excellence has proven success in helping companies develop strategies to address their most complex direct spend areas. We explore several price, process, and demand levers to identify untapped opportunity and capture sustainable long-term value.
Direct Materials COE Services
Insight Sourcing Group’s Direct Materials COE offers the following array of services:
- Rapidly identify value creation opportunities in Direct Material spend categories that emphasize both cost reduction and supply continuity
- Assessments include analysis of transaction-level data, review of supply agreements, interviews with category stakeholders, and an outline of current and anticipated market factors to generate value creation hypotheses
- Average completion timeline is 3-4 weeks
- Develop robust value creation roadmaps that identify near and long-term value capture initiatives for Direct Material categories with complex market dynamics and unique business requirements
- Strategy documents include a detailed overview of the current state, an in-depth review of the supply market, identification of key cost drivers, and completion of a value creation roadmap
- Key outputs of the value creation roadmap include identifying cost reduction opportunities, defining supply chain risk mitigation strategies, and highlighting opportunities to optimize category management practices to sustain value capture
- Average completion timeline is 6-8 weeks
- Execution of traditional sourcing strategies to drive cost savings and improve operational performance
- Example sourcing strategies include Competitive Sourcing, Strategic Incumbent Negotiations, Make vs. Buy, Should-Costing, and Supplier Collaboration
- Average completion timeline can vary based on strategy complexity, but on average take 4-6 months from data collection to initial savings realization
- Drive value creation by leveraging the competitive advantages of global supply markets to drive cost savings and increase supply chain resiliency
- Sourcing strategies often explored include Best Cost Country, Right Shoring, and Geographical Supply Base Diversification
- Our boots on the ground personnel in North America and across multiple countries in the Asia-Pacific help expedite and drive value capture
- Average completion timeline is 4-6 months from supplier engagement to final shortlist recommendations and initial trial orders
- Create value in constrained environments by changing the nature of what and how goods are purchased to shift power away from the seller to the buyer
- Sourcing strategies include Re-Specification, Demand Optimization, and Value Analysis / Value Engineering
- Our subject matter experts with extensive engineering backgrounds and deep knowledge across critical manufacturing processes help identify inefficiencies caused by complex designs and solutions to solve them
Category Snapshot
- Metals
- Chemicals
- Resin
- Components
- Co-Manufacturing
KEY METRICS
$120M+
Savings Captured
15+
Direct Materials Consultants
8-10%
Average Savings Delivered
10+
Subject Matter Experts
$1.5B+
Spend Addressed
Leverage Our Deep Direct Materials Sourcing Expertise.
We have delivered average direct materials savings of 8-10% since our firm’s inception.