We were approached by a purchasing manager who had just started a new job as a purchasing manager at a pet food wholesaler.
From his own experience, he did not know the specific cost components, raw materials, and industry costs of his new assortment. To get a good idea of costs, opportunities, and assortment/supplier strategy for the upcoming annual meetings, WTP was consulted.
Approach with WTP
They started working with WTP to make product calculations using the available Bill of Materials.
This quickly revealed the cost structure of the assortment of its main suppliers. After this, a strategic choice was made for an 80/20 approach. Both in terms of assortment and number of suppliers.
With this approach, a clear purchasing strategy for the coming year, as well as a 3-year plan, were made within 2 months. This was done without any prior industry knowledge of the purchasing manager.
The annual talks resulted in a margin expansion of 2.5% (value approx. €400.000).
Also, with better agreements on indexation of price changes.
In addition, the WTP information was “translated” to the sales team, where it is used to support price changes.