- 150%inventory cost growth at baseline
- 12 → 7suppliers after consolidation
- $2.75Mmaterial and sub cost out
- 30%inventory value reduced
Every figure was validated with the client.
Baseline
Blue Stream Fiber is a Florida-based regional provider of internet, TV and phone products, delivered over an advanced fiber network the company built itself.
The company was growing fast and preparing for private equity investment and, ultimately, an IPO. Growth had outpaced the operating infrastructure. Operations were siloed, systems were not integrated, and inventory costs had ballooned by 150% with limited controls and no defined procurement or inventory management processes. For a company heading into diligence, that combination is both a cost problem and a credibility problem.
What we did
The work addressed cost and process at the same time, because in a scaling business neither holds without the other:
- Competitive bid and negotiation with incumbent suppliers, testing pricing that had never been tested.
- Leveraged spend to fewer suppliers, consolidating from 12 to 7.
- Renegotiated purchase order values with distributors.
- Developed standard bills of materials (BOMs), so design and construction could order consistently.
- Optimized the sales process to use inventory on hand, rather than ordering against stock the company already owned.
Implementation and adoption
Process changes ran through the teams that do the work. We improved the sales and operations planning (S&OP) process, tightened communication between design and construction and the warehouse to reduce errors, and improved data accuracy for inventory on hand so that decisions were made against real numbers.
Validated result
- $2.75M reduction in material and subcontractor cost.
- Inventory value reduced 30%, releasing working capital that growth had tied up.
- Supplier base consolidated from 12 to 7, concentrating volume and simplifying management.
- Shorter lead times for subcontractors and more efficient design and construction, from standard BOMs and better communication.
Blue Stream came out of the work with lower costs and, more importantly for its next stage, defined procurement and inventory management processes that an investor or acquirer can see working.
“S2V proved to be valuable partners to not only reduce our cost, but more importantly help us scale our business through implementation of best practices in procurement and supply chain management.”
Related
- Spend Analysis: S2V Compass
- Procurement Transformation: S2V Blueprint
- Strategic Sourcing: S2V Accelerator
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