Background
InBev is one of the world’s largest brewing company experiencing significant year-on-year sales growth in China where it owns many breweries which have been acquired over the last few years. Until recently, these breweries were all run as independent entities resulting in very limited synergies being leveraged nationwide including on the procurement side. Management decided to launch a cross-brewery cost reduction programme with a strong focus on leveraging their procurement scale. In order to pilot test the approach, Dragon Sourcing was selected to support the programme by focusing on the corrugated packaging spend.
Approach
- Created multi-functional and multi-brewery team with representatives from each of the factories
- Selected corrugated carton as the pilot category to drive DS strategic Sourcing process
- Developed list of qualified suppliers for both paper suppliers and corrugated suppliers through and RFI process
- Run RFQ process with suppliers to select suppliers for face to face negotiations
- Conducted price negotiations with short list of current and new potential suppliers
- Identified additional cost savings opportunities through value re-engineering of the product
Results
Demonstrated value of working at China national level versus working on a local for local basis
Succeeded in negotiating close to double digit price reductions with incumbent suppliers rendering implementation of the savings very simple and instantaneous
Identified further cost reduction opportunities (e.g.: by switching from offset printing to water printing) to be implemented medium term