STAR2

Axalta Coating Systems 1

Case Study STAR Report 2

SITUATION

ACTION

TASK

RESULT

.

Incumbent is primary source, for Terminals & Scales in North America, the supplier is not currently under contract. We have a qualified NA competitorNA spends $8MM with Incumbent annuallyIncumbent proposed a new contract that will increase annual expense by 900k • 4% across-the-board price increase. (320k additional expense to Axalta)• A 1.3 multiplier for Dollar to Euro conversion (600k in arbitrage revenue to

Sartorius) • Multiple negotiations at multiple levels of Incumbent have yielded no

movement

Devise Strategic near-term/far-term plan to:

• Reduce costs• Uncover immediate (drop-in) cost savings & far term innovations• Qualify Regional/Global alternates• Quantify equipment life cycle and repair frequency, build wish list• Engage stakeholders/gain buy in, establish regular touch points• Understand legal/ethical responsibilities to customers• Consult industry and internal experts on functional requirements

for fire safety• Establish optimal technical, fire safety and performance

requirements

Identified savings opportunity of 25-35% or $2.0MM to 2.8MM based on opportunity to:

• Leverage equipment prices through competition• Integrate alternate in place of incumbent• Qualify and integrate alternate specification equipment

Savings Capture Strategy:• Complete site visits to establish operational and fire safety

snapshots • Build/store a database of Fire Safety requirements by site• Capture savings where alternate specification is acceptable• Qualify alternates to leverage global purchasing power• Complete negotiations with alternate and re-open negotiations

with incumbent

Enlisted team of: Procurement, Legal & Compliance, Business LeadersResearch• Established overall legal, fire safety, and OH requirements/responsibilities• Conducting leadership/stakeholder interviews & multiple/varied site visits to establish operating conditions and specific, site-by-site fire safety standards • Identified (and are qualifying) 5 Global alternate Suppliers (1 EMEA Incumbent)• Identified (and are qualifying) an alternate specification that would lower costs by 40%• Interviewed product manager and service provider to establish repair frequency, sla’s and develop supplier performance “wish list”

Supplier Management• Declined new contract• Engaged alternate for significant price concession on “drop-in” alternate