Lifecycle cost-based sourcing in Europe

Challenge

This successful medical technology provider to hospitals and long-term care facilities conducted operations in multiple European countries. A pan-European purchasing organization, recently formed in the Netherlands, required support to conduct a multi-country sourcing process covering automobiles for sales and senior executives and cargo vans to efficiently deliver equipment to healthcare facilities.

Approach

• Internal research: Conducted interviews with company executives and delivery supervisors in all major European markets, to understand requirements in detail.
• Market research: Analyzed vehicle offers by major manufacturers in each of the European countries of interest, along with regulatory and other major cost drivers.
• Sourcing process: Led the pan-European sourcing process, including preparation of RFI and RFP, initial screening of proposals, in-person meetings with finalists, evaluation of final revised proposals, calculation of savings and recommended contract awards.

Results

• Reached a solution that was acceptable to company top management, the central purchasing organization and the managements of the various European country-level units.
• Consensus solution yielded savings of 14% in average annual vehicle costs. Main levers were choice of leasing company, vehicle manufacturer selection, fuel savings, mileage management and lengthening of lease durations.