Supply Excellence — A Mid-Market Supply Tale

A Mid-Market Supply Tale

February 22nd, 2007 · by Tim Minahan · No Comments · best practices, sourcing, supply management

Yesterday we identified some of the practices of the top-performing supply management organizations in the mid-market. Before that, we examined the pressures forcing mid-market companies to step up their supply management capabilities — and the challenges that stand in their way. Today, we’ll showcase the real-world supply management transformation of Le Chase Construction, a $500 million construction company.

Like a growing number of mid-market companies are discovering, the New York-based construction firm was driven to improve supply management performance in response to tougher scrutiny of is sourcing and supply chain performance from one of its key customers. Looking to enhance efficiencies and reduce costs across its entire supply chain, this large customer assisted Le Chase in adopting some of the best practice approaches it had used, including the deployment of an e-sourcing solution.

Le Chase shared its early experiences with e-sourcing in a webinar last year. (You can download a replay here.) Not surprisingly, one of the first e-sourcing initiatives the company conducted was a $200 million construction project for the key customer noted above. Said Bill Schrouder, project engineer for Le Chase: “We were challenged to gather RFP responses in a timely and efficient manner. In our traditional paper-based mode, it was a huge task to prepare and distribute the documentation and specifications required for an effective RFP. It was also challenging to analyze the responses to make total best-value sourcing decisions for highly-specialized services.”

With its first e-sourcing project, Le Chase was able to reduce sourcing burdens and cycles dramatically. “It’s a very efficient, Web-based tool that saves us and our suppliers an extensive amount of time in communication and document control,” said Schrouder. ”We can easily post documentation and architectural specification in Le Chase’s standard nomenclature for a variety of suppliers for different trades.”

Schrouder adds that the use of e-sourcing for the first time provides Le Chase’s extended project team “immediate access to an online repository of supplier information.” e-Sourcing has also helped “increase the level of supplier participation” in Le Chase’s construction bid projects.

Le Chase is now using e-sourcing to other spend categories. ”Although initially drive by our cusotmer, we [e-sourcing] has provided us with better supplier management, better supplier participation, and significant dollar savings. The ROI we’ve seen has more than covered the cost of the tool.”

Le Chase is just one example of a growing number of mid-sized enterprises that are making pointed investments in resources and technologies to improve their supply management cost structures and performance. With globalization, inflation, and energy costs on the rise, more mid-market firms will move to make supply management a core competence. Supply Excellence will continue to bring you stories from the frontlines of this mid-market transformation.

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