Strategic sourcing consulting: $6.5M in marketing spend saved for a multi-site food manufacturer

Project overview

About the client

A multi-site food manufacturer with procurement covering raw materials and packaging, alongside decentralized purchasing across Marketing, Trade Marketing, Commercial, and Logistics.

As the organization grew, significant indirect spend remained outside the central procurement function, creating inconsistent sourcing practices and limited competitive pressure across several high-value categories.

Challenge

The company’s procurement policy was outdated and was not consistently applied across the organization. The biggest gap was in Marketing and Trade Marketing, where significant supplier spend was managed independently from Procurement.

The diagnostic found that approximately $6,500,000 in annual Marketing and Trade Marketing spend was being sourced through 20–25 competitive events without centralized procurement oversight.

This led to several issues:

• An outdated procurement policy that did not clearly cover all purchasing functions
• Marketing, Trade Marketing, Commercial, and Logistics managing supplier selection independently
• Closed, invitation-only sourcing processes that limited access to new qualified suppliers
• A single low-value approval threshold applied to purchases regardless of their size or complexity
• No reverse auctions for categories where strong supplier competition could drive better pricing
• Supplier data managed through fragmented spreadsheets without consistent scoring, performance tracking, or supplier-risk records
• Document review identified potential supplier-integrity concerns, including competing bidders sharing the same contact information
• No formal strategic supplier or preferred-partner program

Key objectives

The transformation focused on:

• Bringing high-value indirect categories under centralized procurement governance
• Expanding the qualified supplier pool
• Introducing more transparent and competitive sourcing processes
• Aligning approval requirements with purchase value
• Building category ownership for Marketing and Logistics spend
• Creating a structured supplier database and performance framework

Our procurement consulting approach

We prioritized the categories where increased competition could create the fastest impact, then redesigned sourcing and governance around transparency, category ownership, and value-based controls.

Category prioritization

Analyzed procurement activity and identified approximately $6.5M in annual Marketing and Trade Marketing spend managed outside Procurement across 20–25 sourcing events. We prioritized Marketing and Trade Marketing for centralization after Logistics, setting a phased path toward broader procurement coverage.

Category management design

Designed dedicated category ownership for Marketing and Logistics procurement, bringing these spend areas into the centralized procurement structure. Category managers were given responsibility for sourcing strategy, supplier management, and category performance.

Open competitive sourcing

Recommended replacing closed, invitation-only tenders with an open supplier registration model. A dedicated Procurement section on the corporate website would allow qualified suppliers to register their interest and participate in relevant sourcing opportunities.

Tiered procurement governance

Replaced the single flat approval threshold with a three-tier authority model: Functional leadership approval for lower-value purchases; Cross-functional Working Group review for mid-value purchases; Tender Committee approval for high-value or strategic purchases. This matched procurement governance to the financial significance of the decision.

Competitive sourcing tools

Introduced online reverse auctions for standardized categories with sufficient supplier competition, creating additional price tension after the initial competitive bidding process.

Supplier data and governance

Designed a centralized, auditable supplier database to replace fragmented spreadsheets. The proposed structure included supplier qualification, performance scoring, category information, and supplier-risk tracking.

Deliverables

• Category prioritization and centralization roadmap
• Category management operating model for Marketing and Logistics
• Open competitive sourcing policy
• Three-tier approval and authority matrix
• Reverse-auction playbook for competitive categories
• Centralized supplier database specification

• Phased procurement transformation plan

• A proposal for procurement consulting services

Results

~$6.5M in Marketing and Trade Marketing spend identified for centralization

Previously managed outside the Procurement function across approximately 20–25 sourcing events per year.

Open sourcing replacing closed supplier invitations

The redesigned model creates a public supplier-registration channel, allowing qualified vendors to express interest in relevant categories rather than relying solely on an existing supplier network.

A three-tier approval structure

A single flat approval threshold was replaced with value-based governance, allowing routine purchases to move faster while directing strategic and high-value decisions to appropriate review.

A structured supplier data model

The proposed supplier database replaces fragmented spreadsheets with a consistent framework for supplier qualification, performance scoring, and risk tracking.

A phased path to procurement centralization

The transformation roadmap moves from Logistics to Marketing and Trade Marketing, followed by broader company-wide procurement coverage.

Business Impact

The procurement advisory revealed a significant structural gap: nearly $7 million in annual Marketing and Trade Marketing spend was being sourced without central procurement oversight.

Bringing these categories into the same governed sourcing model as raw materials and packaging creates a consistent approach to supplier selection, competitive bidding, approvals, and supplier management.

Opening the sourcing process to qualified suppliers broadens the potential supplier pool, while reverse auctions add competitive pressure in categories where the market supports them.

The new value-based approval model also gives leadership greater control over strategic spend without slowing down routine purchasing.

Together, these changes establish a scalable strategic sourcing model built around category ownership, competitive tension, supplier transparency, and centralized procurement governance.