1. 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
• Complete negotiations with alternate and re-open negotiations
with incumbent
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