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Sourcing Optimization
Our Approach to Sourcing Optimization

For many years, BMGI has helped clients address their strategic sourcing and procurement challenges. Whether the goal is to reduce costs, reduce inventory, reduce transactional costs or ensure successful BPM automation, BMGI has the tools and techniques to consult with your team.

BMGI's Sourcing Optimization services have provided millions in dollars in direct savings to our clients. Spending reduction programs have traditionally followed the "Iceberg Model". They focus on the one-third of costs you can "see." At BMGI we don't ignore that top-third, but our tools and techniques also address the two-thirds that cannot easily be seen in traditional spend and commodity analyses.

BMGI prefers to begin Sourcing Optimization projects with a Value Stream Analysis. This allows us to develop a cross-functional view of all sourcing/procurement activities. Experience shows that it is essential to establish a good cross-functional understanding to ensure reliance on historical policy and practices and sensitive issues like internal politics are immediately addressed.

Depending on the Value Stream Analysis and client requirements we then focus on project areas that will return the greatest amount of hard-dollar savings. We can pursue a Spend Optimization Analysis, Commodity Area Optimization, Payable Practice Optimization or an Inventory Reduction Analysis or Transaction Cost Elimination Analysis. Our roadmap depends on each unique client's requirements.

Unlike major national consulting firms, BMGI clients are comfortable that BMGI provide unbiased advice. We do not have an army of programmers or an outsourcing division that compete with a client's best interest.

Working closely with clients every step of the way, our consultants follow a rigorous improvement process that begins with goal setting and planning, follows through to program development and deployment, and ends with goal realization. BMGI can also provide Sourcing Process Redesign as part of our Organization Transformation Practice Area.

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Value Stream Analysis
Today's sourcing professionals need to be able to visualize the entire value stream - the sequence of inputs and steps to produce a project or a service - and not just the internal processes. Our approach to value stream mapping involves internal staff as well as supplier representatives. Only through understanding the entire value stream can sustainable savings be achieved, and long term relationships maintained.
Systems Optimization
Like any other part of your business, your IT systems need to be continually re-evaluated for the effectiveness. That ERP deployment you did two years ago is already dated. BMGI's proven methodology ensures that your procurement process automation is still meeting the metrics you need to maximize your spend management.
Spend Assessment
BMGI Master Consultants are experts in data analysis using many software platforms. We will analyze your spend by commodity, supplier, internal department, or other stratifying factor to identify the areas most ripe for cost reduction. Unlike traditional spend analysis we will come at your data using a prioritization process that assures we are going after the most costly areas first. We can also test for "shift and drift" - this allows us to ensure whether sourcing procedures you implemented last year are still effective or in need of optimization.
Transaction Cost Elimination Analysis
We have all read the studies, it costs $110 to create an invoice, it costs $85 to produce and Accounts Payable check, etc - pick your number. The costs of processing transactions are significant. These costs pile up because of inefficient processes. While creating an audit trail that complies with internal controls of Sarbanes-Oxley standards are important for operating a well managed business - how many sourcing related processes do you have simply because you have always have? How many sourcing related processes do you have because of an ERP or system implementation?
Inventory Reduction Analysis
Reducing inventory, and work in progress means you spend less! This is true for manufacturing and it is true for service companies, who don't always have a system for tracking the costs of their work in progress.
Procurement Process Assessment
Drawing on hundreds of engagements helping client transform large and small elements of their business, BMGI uses an end-to-end Value Stream Assessment method. This method "maps" your processes from suppliers, throughout your cross-functional organization to your customers. Our proven process is very heavy on data collection and continuous data analysis techniques. This approach has enabled BMGI clients to slash procurement cycle times by up to 80%.
Payable Practice Optimization - the 25%+ Rate of Return
One of the easiest ways to reduce spending is by taking advantage of early payment discounts. Many companies are unable to process a payment within a 10 or 30 day window to take advantage of these discounts. BMGI can eliminate unneeded process steps and streamline payment approval optimization. BMGI can help you change your processes allowing you to take trade discounts. Remember a 2% / 10 day discount has an annualized rate of 36% !!! Even when you factor in the cost of money during that 20 day period, your ROI is easily in excess of 25%. Do you have a process where you ensure that your demand 2% / 10 terms from all your vendors?
Commodity Area Optimization
In addition to cycle time and spend improvements, BMGI's extensive experience with inventory management methodologies can make a huge difference in helping your company spend smarter. We know how to make significant balance sheet improvements in stock and work-in-progress inventory.
Sourcing Area Process Design or Redesign
BMGI has been in the business of process design and redesign for over 10 years. A unique approach to process design at BMGI incorporates many of the Innovation tools highlighted in our recent book The Innovators Toolkit 50+ Techniques for Predictable and Sustainable Growth. Combining these techniques with our end-to-end measurements of an organizations value streams allows us to help your organization adapt to ever-changing business environments.