The Client

The client is a large Asian steel manufacturing organization with vertically

integrated facilities across India and North America.

Managed Sourcing Servicesfor Global Metals andMining Company

OVERVIEW

Industry: Steel Manufacturing Industry

Geographies: India and North America

Solutions:

- Strategic cost management visioning,

- Spend analytics

- Cross functional specification, sourcing and

management

- Closed loops spend control and command

center

Results:

- Improved capability of client cross functional

team

- Delivered Tangible savings

Managing Experience Case Study | Outsourcing | Steel Manufacturing Industry

Business ChallengeThe client acquired a large cold rolling mill to service the strategic market

of North America. However, the company acquired had issues with its

cash flow and higher operations cost. As part of overall turnaround plan,

the client required to identify a potential approach for improving the

existing cost portfolio and Aegis was selected to identify, recommend

and implement cost savings for its existing materials and services spend

of USD 300 million.

Solutions Delivered by AegisAegis worked with the group Chief Financial Officer (CFO) and Chief

Procurement Officer (CPO) to drive the key program steps as under:

- Strategic cost management visioning workshop: Through a

structured and agile method driven approach Aegis conducted a brief

visioning workshop facilitated by the CFO / CPO and involving all the

key stakeholders to create a unified and aligned understanding of the

program and the expected cross functional responsibilities from each

department

- Spend analytics and category level business project definition:

Aegis team deployed its comprehensive spend analytics expertise that

analyzed the existing organizational spend by conducting a cross

dimensional analytical cube using advanced tools based on Cognos /

Ariba / SAP / Excel functionality consisting of the client’s purchase

order, contracts, invoice, supplier, inventory and demand data. The

team then defined a set of key project / improvement hypothesis by

leveraging these analytics with the existing category level data

intelligence available with Aegis through its supplier cost database and

global market intelligence efforts.

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Managing Experience Case Study | Outsourcing | Steel Manufacturing Industry

- Cross functional specification, demand alignment, supplier and

price discovery: Based on the identified projects, Aegis team identified

a phased implementation plan as shown in Figure 1: Representative

Project Configuration. For each of the projects, a cross functional team

was then established with the Aegis lead facilitating implementation with

support from client’s operations, finance, procurement, legal and supply

chain teams. Aegis team delivered a rationalized specification, the target

demand, list of key suppliers and the target market negotiation strategy

using it’s structured “Should be’ cost modeling technique.

- Strategic sourcing and RFx management: Having defined the key

requirements and the target potential to save costs, Aegis then led an

eSourcing phase where it managed the complete RFx cycle, supported

client through both online and offline negotiations and helped arrive at

the new target price of acquisition thereby delivering the identified

savings.

- Closed loops spend control and command center: For the savings

identified, Aegis team then coordinated with the clients cross functional

team the new contract and setup the contract in the underlying contract

management systems including SAP material module, SAP master data

management module. Further, the Aegis team deployed and managed a

quarter end reconciliation process to ascertain compliance to the new

contract and realization of the defined benefits to the client.

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Managing Experience Case Study | Outsourcing | Steel Manufacturing Industry

FacilitiesManagement

ComputerTravel

Consumable Telecom

Marketing &Advertising

Building &Grounds

OSHC

Insurance

NonCAPEX

CAPEX

Fees

Retail

Lease

SWLicenses

Stationery

Postage&

Freight

MyExpense

Printing

Catering &Entertainment

Wave 2

Wave 3

Wave 1

Non Criitical

High

High

Low

Low Market / Supplier Complexity (Diversity / Perference / Change)

Busi

ness

Impa

ct (%

of t

otal

Spe

nd)

Bottlenecks

Leverage Strategic

Electricity &Gas

Figure 1: Representative Project Configuration

Key Results and BenefitsAegis delivered the following key benefits to the client:

- Improved the capability of the client cross functional team: Aegis

team ensured that through the duration of the program, the involved

client team members are adequately trained on the new methodologies,

tools and the processes to ensure that these team members can

support the process in a sustainable manner post Aegis’ exit

- Delivered tangible savings: Aegis team helped clients to reduce

sourcing and procurement costs in the range of 11-15% though cross

functional approach outlined above. Indicative savings delivered are as

per Figure 2

Figure 2: Commodity wise Savings Matrix

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Managing Experience

Material Commodity Name ProjectStart Date

ProjectFinish Date

Spend2010-11USD Mn Total

Savingas % SpendAddressed

Fluids / Gases / Equip. Pipe / Fittings / Spools / 10 Nov’11 1 Dec’11 $ 1.56 18% Tube / Tube Fittings

Packing / Seals / Brgs. Bearings, Busing, 22 Nov’11 22 Dec’11 $ 3.34 11% Acessories Flangs

Material Handling Rigging / Wire Rope 1 Nov’11 28 Nov’11 $ 1.37 9%

Material Handling Fasteners Bolts, Nuts 1 Nov’11 25 Jan’12 $ 0.94 18% Screw etc.

Transportation Wheels / Tires 29 Jan’11 2 Sep’11 $ 2.85 3%

Travel Services Travel Tickets 27 Jan’11 7 Sep’11 $ 0.20 33%

Tools Abrasives 22 Nov’11 23 Dec’11 $ 0.94 5%

Tools Drill / Mill / Bore / Turn 15 Dec’12 30 Mar’12 $ 1.36 17%

Mech. Power Trans. U-joints / Drive Shaft/ 20 Jan’12 29 Mar’12 $ 3.90 8% Pulley etc.

Fluids / Gases / Equip. Water Treatment 5 Mar’11 13 Apr’12 $ 3.00 23% Chemicals

Fluids / Gases / Equip. Filtration 10 Nov’11 1 Dec’11 $ 1.04 13%

Safety / Medical / Lab Clothing, Safety Supply 22 Nov’11 22 Dec’11 $ 2.80 14%

Bldg / Fabricatng Matl Metal Stock / Structural 1 Dec’11 10 Feb’12 $ 2.72 9% Steel

Elec Ctrl Components Transformers - New 10 Feb’12 20 Apr’12 $ 1.02 19%

Elec Ctrl Components Six Categories of 20 Jan’12 28 Mar’12 $ 0.90 11% Electrical Item

Packing, Seals, Gaskets Packing, Seals, 3 Feb’12 8 May’12 $ 1.11 18% Gaskets, Ring

Fluids / Gases / Equip. House / Hose Assemblies 5 Apr’12 18 May’12 $ 1.12 9%

Fluids / Gases / Equip. Valves Complete 1 Mar’12 10 May’12 $ 2.49 9%

Case Study | Outsourcing | Steel Manufacturing Industry

- Reduced risks and improved process efficiency: A positive by

product of the Aegis approach was to assist the clients in improving

the overall process efficiency / risks by increasing the number of

categories being managed through contracts (reduced maverick /

adhoc buying). These led to less operational efforts involved in

managing procurement transactions and improved the overall contract

coverage and compliance.

About AegisAegis is a global outsourcing and technology company committed to

impacting clients’ business outcomes by focusing on enhancing

customer experience across all touch points and channels. Aegis was

founded 30 years ago in the US and now has operations in 56 locations

across 13 countries with more than 55,000 employees. Aegis services

over 300 clients from verticals such as Banking and Financial Services,

Insurance, Technology, Telecom, Healthcare, Travel & Hospitality,

Consumer Goods, Retail, and Energy & Utilities. The company is wholly

owned by the Essar Group, a USD 27 billion conglomerate.

For more information write to us at info@aegisglobal.com or visit

www.aegisglobal.com

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Managing Experience Case Study | Outsourcing | Steel Manufacturing Industry