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A leading advanced industries company

With Category Analytics Solution and machine learning, we are helping an advanced industries company gain significant savings across multiple spend categories.

$328M

spend analyzed

of which $180M was on maintenance, repair, and operations (MRO) parts

1,286

locations

in the US and Canada

4,434

suppliers

in 69 MRO categories and subcategories

Approach

We used machine learning and a 6-level taxonomy to classify the MRO spend of this company and then applied four advanced-analytics opportunity levers to the global MRO spend. The results included:

  • Eliminated price variance by comparing same-parts rates across suppliers.
  • Identified top-spend suppliers contributing to 80% of spend.
  • Started sourcing parts from non-OEM supplier. Calculated opportunity by applying a 30% rate reduction and 50% capture rate.
  • For the most granular categorization, divided SKUs into 3 tiers based on price. Sized opportunity by moving to the lowest cost SKU within each tier.

Impact

~$18M total opportunity sized

  • $7.4M identified by making a switch to non-OEM parts
  • $7.2M sized by consolidating supplier base
  • $2.5M identified by optimizing the prices across suppliers
  • $0.5M identified by rationalizing the SKUs within a category-tier combination

Related

Learn more about Category Analytics Solution