$8M a year and 22% off packaging spend for a global agricultural food producer

Category Management Packaging spend Food and beverage
Carriers:
Landsberg Westrock International Paper
50d85fbb32d9c509c0cb5837040d58c65269e131

WHO

Business model

A global leader in agricultural food production and distribution, buying corrugated and rigid plastics packaging across many business locations.

Industry

Food and beverage. Trans-Solutions has been a trusted provider of subject matter expertise to this client.

PROBLEM

What they felt

In 2022, the client initiated significant cost-cutting initiatives in the areas of corrugated and rigid plastics packaging.

What they felt

  • 6 different vendors, over 100 corrugated SKUs, and over 500 non-corrugated SKUs
  • Largest supplier had no agreement in place
  • Lack of enterprise-wide spend visibility and access to contracts
  • Unfavorable vendor contracts and cancellation penalties
  • Inconsistent price escalator and de-escalator language and terms across suppliers

WHAT WE DID

Prep and analysis

We established client goals, expectations and data requests during kick off meetings with stakeholders, followed by a complete holistic assessment of category dynamics, utilization and KPIs, then in-depth usage analyses that identified potential cost savings for each packaging category.

Execution and coaching

Trans-Solutions negotiated multiple implementation options for each spend category, then guided the client in selecting customized implementation options. We negotiated a final pricing plan and contract with new providers, including direct manufacturers, and optimized contractual terms to ensure maximum long-term benefit.

  • Regional smaller asset based carriers on short haul runs
  • Lanes aligned to larger national carriers, where complementary freight yielded lower pricing
  • Backhaul matching, dedicated fleet optimization and continuous move alignment
  • Increased volume to some incumbent carriers, which produced savings beyond sourcing lower rates alone

We built the function, not just the deal

The client did not have a category management function for packaging. We established one, so the savings do not leak back the next time contracts come up.

RESULTS

What they got

22% cost reduction and $8M a year, consolidated into a champion/challenger model

A 22% cost reduction and $8M in savings a year, with spend consolidated into a champion/challenger model.

Post implementation the client had improved visibility and control of key suppliers, and a new process for onboarding and purchasing across all business locations. Standardized terms and conditions favor the client, coterminous agreements maximize leverage for future RFPs and pricing exercises, and costs now carry detailed visibility and increase and decrease mechanisms that track with market indices.

How long it took

8 months total, with negotiations over 3 months.

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