Progroup partners with H&Z for strategic cost management transformation
Progroup, a family-run company and a European market leader in the paper and packaging industry with seventeen production sites across Europe and the United Kingdom, worked together with H&Z Management Consulting on improving its cost competitiveness.
The collaboration between H&Z Management Consulting and Progroup was aimed at transforming its strategic cost management. The initiative was undertaken to enhance profitability, resulting in an achievement of more than 8% in savings through strategic sourcing, streamlined supplier management, and improved data transparency.
Progroup had already established a successful, decentralized operating model, where local Maintenance, Repair, and Operations (MRO) processes ensured smooth daily performance and upheld the company’s strong market position.
But despite steady growth and smooth operations, Progroup recognized an opportunity to take a further step by harmonizing and bundling MRO management across all sites and unlocking synergies to elevate its well-functioning system into a truly best-in-class operation. Together with H&Z, the company worked to advance its strategic cost management across eleven key categories.
Optimizing sourcing
H&Z Management Consulting supported the project with a strategic sourcing effort, which required six months to establish the necessary system and identify optimal suppliers for the relevant MRO categories.
The firm’s consultants enriched the existing MRO parts data within specific categories, using an AI-based system partner to develop market baskets. These ‘baskets’ were then made available to potential suppliers in a competitive bidding process.
Existing service providers were then segmented, and potential preferred partners were pre-selected in close consultation with Progroup’s various locations. Through a rigorous three-stage Request for Proposal (RfP) and negotiation process, supported by interdisciplinary collaboration, the new, superior supplier base for Progroup was nominated, allowing the company and its Procurement department to realize all the benefits of the improved structure.
The collaboration yielded great results. For example, there was a notable reduction in the overall supplier base – from more than 1,000 to fewer than 100 suppliers. Progroup was able to significantly decrease process costs and optimize collaboration models across the organization.
“In H&Z, we found a partner who ensured that the project results and agreements with the supplier partners were realized in contracts and that we did not have to make any compromises in terms of quality, security of supply, flexibility and service or in our cooperation with the suppliers,” said Klaus Heininger, Head of Central Purchasing at Progroup.
A previous H&Z report found that after a two-year decline, business sentiment regarding supply chain issues has been stabilizing, in large part thanks to optimism that investments in AI will significantly boost their functions. AI tools have been particularly useful in forecasting and operative activities, despite most companies still being in the testing phase with AI.
