The suppliers and product rationalizations are completed in just a few weeks.
The contract with the major prime
distributor was renegotiated
to reduce mark-up by 2.5% (instead of projected 2% increase) leading to savings of $500,000 on a yearly basis (instead of an increase of $400,000).
Programs and volume rebates are implemented with major manufacturers leading to annual savings of $1,600,000. Contracts are also renegotiated with secondary suppliers for additional annual savings of $300,000.
The CEO and the entire management team got full bonus for exceeding company’s profit goals.
Total savings: $2,400,000 and total cost avoidance: $400,000
OPTIMBUY impact: $2,800,000 translating into 10% of Total Purchasing spend.