Automotive

Automotive Supplier Proposal Analyses:
Collaborative Optimization Sourcing

Collaborative optimization (CO) sourcing is a break-through innovation that builds on A.T. Kearney’s proven 7-Step strategic sourcing approach, using advanced analytics for capturing total value across automotive supply partners.

CO sourcing uses flexible, “expressive” bid sheets, which allow supply partners to submit proposals that demonstrate and leverage unique capabilities. The (cost) benefits are identified with solver (combinatorial optimization) based tools that support iterative scenario analyses based on specified award constraints.

CO sourcing is the new best-practice, collaboration-based sourcing process for complex category sourcing (e.g., logistics, packaging, MRO) and value chain sourcing. In addition, the approach and toolset can be used for addressing broader supply chain challenges, such as portfolio or component complexity management.

Through CO sourcing, A.T. Kearney has helped automotive companies realize significant cost savings and improvements. Here are a few examples:

CO Transportation Sourcing – addressed a spend of $300MM and realized savings of 18% for the client. Expressive bidding allowed carriers to present economies driven by network, capacity, and mode equipment and/or other capabilities. Complex award-scenario modeling/optimization across thousands of multi-mode lanes and hundreds of suppliers, and involving one-tenth of the client’s multifunctional stakeholders was performed successfully over the course of only two days, using the solution’s advanced analytical tools.
CO Packaging Sourcing – addressed a global corrugate spend of $240MM and realized savings of 14% for the client. Parametric cost modeling and expressive bidding allowed carriers to share insights into their operating cost and submit (conditional) offers for alternate material and/or service specs, portfolio/sku rationalization, the award of product 'bundles’ and/or volume tiers.
CO Temporary Labor Sourcing – addressed a global spend of $210MM and realized savings of 17% for the client. Cost modeling and expressive bidding allowed suppliers to compete on (country specific) agency fees and employee pay rate, alternate employee experience profiles, job profile service range, and geographic scope. Award scenario optimization – across seven thousand unique job profiles, one hundred plus agencies, and stakeholders from fifty-two client businesses – was performed successfully over the course of four days by a project team of six, using the solution’s advanced analytical tools.