Global Strategic Sourcing Study for Heavy Equipment

Over the past decade, this Fortune 500 mining division resulted from more than 12 mergers and acquisitions. Consequently, the client’s supply base was highly fragmented, lacking formal supply agreements or a global procurement strategy, with pricing varying unpredictably by location and no established market approach. Additionally, the client had to navigate strict regional government safety regulations, complicating the shift to alternative supply sources.

During initial visits to this client’s diverse global manufacturing sites, the LVP team engaged with key personnel to gain insight into the client’s strategy, structure, operations, and systems. Additionally, LVP performed a comprehensive spend analysis to pinpoint categories with the greatest savings potential.

The LVP Team:

• Completed over 100 interviews with professionals across functions and divisions, collecting detailed data to benchmark costs and processes
• Selected Batteries, Castings & Forgings, Machined Parts, Hydraulics, Electronics, Ocean Freight, and Steel as the primary sourcing categories
• Highlighted the urgent need for developing skill-based training programs

To realize the savings opportunities found during evaluation, LVP applied an 11-Gate Strategic Sourcing Process focused on the seven key categories. Project teams operated globally from Germany, Australia, China, and the United States, creating a practical, hands-on learning environment for client teams. Suppliers worldwide were engaged to identify best-cost countries by category. Site visits and negotiations took place on five continents to maximize savings.

• Addressed specific technical and regulatory requirements for each manufacturing and service location
• Provided client training in Process Methodology, Executive Communication, Global Negotiations, Site Assessments, and Alliance Management
• Built relationships at OEM and mill levels to shift supply from distributors to a direct purchase model

The client achieved more than $30MM in cost savings, notable operational and service enhancements, expanded engineering and technical support, and implemented a formal cost reduction program with every alliance partner. Altogether, these outcomes reshaped the client’s supply chain strategy and created a solid base for ongoing savings growth.

• Secured global supply agreements for all seven categories, ensuring stable and consistent pricing worldwide
• Implemented a structured sourcing process through hands-on experiential learning