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Introduction and challenges

A large proportion of manufacturers have seen a significant increase in the share of direct materials cost in their manufacturing cost. Even with internal production, it is not uncommon for materials to make up more than 60% of manufacturing cost. Procurement has, therefore, become increasingly important over time, with responsibility in terms of managing stock levels and securing flows/production plans with one objective: “0 missing”.
While ERP and supplier portals promise to save time and facilitate exchanges, the situation is often quite different with buyers spending a large proportion of their time on administrative tasks with low added value (placing orders, order validation process, invoice reconciliation, etc.). Teams are very often overwhelmed by emergencies as a result of an increasingly volatile environment (fluctuating customer demand, bullwhip effect, etc.) and have difficulty focusing on the real priorities. There are often many exception messages to be processed for which ERP do not facilitate efficiency. In addition to this, there is often low value attributed to, and low recognition of the procurement function, with an insufficiently ambitious level of recruitment within companies that have not yet identified it as a key driver of performance.

How we can help

Argon & Co supports its clients through in-depth transformations of their procurement teams by helping them to move from “administrative agents” to “flow pilots” focused on an active management of the order portfolio and of their suppliers. To achieve this change, we work on four main areas:

  • Reducing non-value-added work with a goal of “placing orders in one click”:
    • Digitalization of exchanges
    • Improvement of the quality of the supply signal (parameter setting and reliability of the master data)
    • Setting up “typical” weeks to better manage time and solve daily-routine issues
  • Obtaining a clear vision of priorities to actively work on real sticking points with the supplier, by activating our supply control tower tool, which allows actions to be prioritized according to their real impact on the end customer
  • Ritualize the relationship with suppliers: regular and structured interaction (meeting agendas, standard communication files, etc.) improves the quality of exchanges with suppliers
  • Control the process by measuring and driving performance based on key off-the-shelf indicators: on-time order placement rate, confirmation rate, OTIF, and delay depth