During the early stages of the global economic crisis, aluminum prices dropped by 60% in six months. As the primary revenue source of the North American primary products division of a large aluminum producer, this created an economic crisis for the division.
An urgent cost reduction initiative was necessary to turnaround the supply chain responsible to provide $2B worth of goods and services to the division annually to free up cash for the business.
(1) Restructure organization of ~200 by removing underperforming management and aligning roles to optimally utilize the strengths of the team.
(2) Renegotiate supplier prices, substitute suppliers and outsource key operations to reduce spend on goods and services, using a kaizen approach.
(3) Reduce storeroom inventory through system and process changes and increase payment terms on supplier contracts through negotiations.
(1) Reduced salary expenses by $2.5 M/year (24%), while simultaneously increasing employee engagement and performance metrics.
(2) Decreased annual spending on goods and services by $83M while maintaining or increasing service levels to the operations.
- Date: 2017
- Categories: Case Studies