Strategic sourcing success stories

Using the seven-step process outlined above (or something similar), some remarkable successes have been achieved. Below are just a few of the successes that have been made public  

AMR Corp., the parent company of American Airlines, hired its first Chief Procurement Officer in 1995. He was given the charter to use procurement to enhance AMR s bottom line. Just a few of his accomplishments since that time include  

Milliken Textiles reduced its time-to-market from 36 months to 6 months by aggressive supplier partnerships and management. First Chicago National Bank instituted a centralized procurement function headed by a senior vice president that achieved some notable success in the first few years, including  

United Technologies (UT), now a part of Honeywell, recently outsourced its nonproduction procurement to IBM Global Services. Among the company s objectives in outsourcing was to force standards and best practices by centralizing with IBM. The CEO committed to his shareholders that this move would result in annual savings of 750 million in 2000. 

BankBoston established a centralized procurement function in 1993 with the mission to save money reduce business risk and make management s lives easier. By 1997, the centralized group had  

At CNA Financial Services, consultant-led client teams developed and adopted sourcing best practices, built economic business cases for various sourcing alternatives, leveraged the entire enter- 

A large building products company ( 4 billion in annual revenues) achieved its target of a 20% reducbon in costs when it applied a strategic sourcing process to its IT and maintenance procurement fxmctions. 

At Sears, an internal effort to reduce the cost of purchased goods and services used for internal use sponsored by the CEO and led by the Senior Vice President of Purchasing reduced armual procurement costs by 1 billion in the first 18 months. These savings were achieved primarily by better processes and by centralizing supplier management and negotiations. 

An electric and gas utility ( 1.5 billion in annual revenues) reduced the number of services providers it used for utility line clearance and storm drain damage repair from many to one. As a result, it reduced its costs by 15%. 

---