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Helping an energy system manufacturer achieve annual savings of $100 million by using supply intelligence
 
 
The client
A leading manufacturer of energy systems. With 2002 revenues in excess of $22 billion, the client provides a comprehensive range of solutions to the oil and gas industry, core power generation technologies and energy management systems.
 
The business challenge

A string of trans-national acquisitions marked the client ‘s drive to market leadership. As a result the client ‘s global foot print expanded rapidly to include operating units scattered across the US as well as in Italy, France, Spain, Germany and Norway.

The supply managers found themselves dealing with an array of direct and indirect purchasing systems across the enterprise. With no consolidated source of information, the client knew it was leaving millions of dollars on the table. Fragmented information also meant that managers found it difficult and labor intensive to answer critical questions about sourcing and supply patterns. Questions ranging from spend on turbines to office supplies were either not answered in a timely fashion or worse went unanswered.

When contract renegotiations arose, managers found themselves handicapped by the lack of information about the supplier and the competitor landscape. Sourcing managers were also unable to translate separate contracts between a supplier and the various operating units to a single leveraged relationship with the vendor.

A process-oriented company, with one of the most mature six sigma processes in the industry the client realized that timely access to actionable supply intelligence was essential to improve efficiencies in supply management.

 
The solution

Wipro worked with the client to identify business metrics which were of significance to the client’s supply professionals. Wipro’s consultants also discovered that a range of reporting and analysis tools were deployed within the organization to address specific business needs of different groups.

Wipro’s consultants then defined a business intelligence framework that enabled strategic sourcing requirements to leverage commodity purchases across the US and Europe. The business intelligence solution also took into account existing investments in tools, technology and training and was also designed to work in a multi-technology environment

The data management team then implemented an enterprise wide commodity classification system. The new system covered base data which was dispersed in incompatible formats on diverse platforms. Inconsistent, multi lingual data and applications were addressed to integrate supply information and product and supplier master data.

 
Business benefits
The client has achieved an average savings of over $100 million on yearly transactions of approximately $6 billion due to
enterprise wide commodity classification using UNSPSC code resulting in increased visibility into global community spend
high quality supply data which allowed the material manager to factor in vendor ‘ drop-ships’ and optimized inventory levels and improved demand forecast accuracy
better supply intelligence which resulted in sustained supply cost reductions


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