Axalta Coating Systems Case Study STAR Report 2 1 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 competitor NA spends $8MM with Incumbent annually Incumbent 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 Enlisted team of: Procurement, Legal & Compliance, Business Leaders Research • 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
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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
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