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18 September 2013 | Marino Donati
US chemical manufacturer Ferro is expecting to slash $100 million (£64 million) supply chain costs by overhauling and standardising its procurement processes.
The firm, which produces technology-based performance materials, has appointed Procurian and Capgemini as part of a strategy to transform its indirect spend, which is currently around $325 million (£204 million).
A five-year deal with Procurian will see the procurement outsourcing company provide source-to-contract and category management services, including category planning, sourcing, demand management, contracting and compliance tools.
Ferro also has expanded an existing agreement with consultants Capgemini to include standardising back-office procurement procedures for indirect spend, and providing data management services, including purchase order creation and management.
Capgemini and Procurian have integrated their strategies to ensure sustained savings over time, Ferro said. The appointments are part of Ferro’s “value creation strategy” which the company said is expected to increase operational efficiencies, drive savings and optimise indirect spend in a flexible and scalable way.
Ferro president and chief executive officer Peter Thomas said: “The benefits we expect to achieve in our indirect spend procurement function give us further confidence that our cost-saving initiatives will generate savings greater than $100 million and drive 2015 adjusted earnings in excess of $1 per share.”
The company is also targeting a half per cent increase in gross profit margin to 21.5 per cent, and a 1.5 per cent boost to EBITDA in 2015.