Solid Engineering has managed to achieve savings of 1.38 million dollars per year for Hewlett Packard through their expertise in product cost reduction. Daniel Fernández Pinteño, a Key Account Manager at Solid Engineering, and Jordi Muñoz, responsible for Worldwide Strategic Sourcing at HP, went into details about this successful case within the frame of the event “Advanced Solutions for Procurement Departments”. The event, organised by CPOnet, was attended by more than 80 procurement directors from the main organisations in Spain, and also featured the presence of notable procurement gurus. It took place in the Main Hall of the renowned Institut Químic de Sarrià (IQS) in Barcelona.
Daniel Fernandez insisted on the great importance of a “thorough study of each piece”, which includes analysing all costs associated with the design, production and supply of each of the pieces required, after which a relocation, renegotiation and even redesign strategy is woven, taking advantage of the negotiation capabilities, process and technology (plastic, metal, electronics, electrical engineering, etc.) knowledge and R&D engineering from Solid engineering.
Renegotiation, skipping the middleman and e-auctions
During the presentation the different piece-by-piece savings were shown, savings that range from 15% for the covers for printers, to 25 % savings on the cutter guide and 63% for the gas spring .The costs of each of these pieces have been reduced through diverse actions: renegotiation of the price, elimination of middlemen, and e-auctions (reverse auction).
As for transactions, Daniel Fernandez particularly stressed the great importance of having “native negotiators” in the countries where the procurement of material is carried out, and pointed out that in this case Solid Engineering has offices in Malaysia, Singapore and China, with local teams in charge of the negotiations and the quality audits of Asian suppliers.
“Not everything comes down to savings”
In the procurement process, “not everything comes down to savings”, said the Key Account Manager from Solid Engineering, who stressed that Solid Engineering teams also “deal with suppliers, undertake audits, and homologate”, and so the Hewlett Packard team were freed from the operational part, for pieces that a priori are less important, through outsourcing to a team of procurement engineers.
In this context, Jordi Muñoz pointed out that one of the main reasons why Hewlett Packard decided to work with Solid Engineering instead of choosing another consultancy firm, was because of the expertise that the company “provides in engineering and in products”, as well as the geographical location of the teams, in reference to the Asian engineers from Solid Engineering.
After two years of working with Hewlett Packard, the results Solid Engineering have achieved are very satisfactory for the American brand, which has led to Solid becoming the consultancy firm that will also manage most of the suppliers for 3D printers (an ambitious project that has been assigned to the Barcelona HP headquarters) and in which Solid Engineering has been given the great responsibility to reduce annual costs for the fundamental pieces.
This gamble is allowing HP to significantly reduce costs and, at the same time, to focus their efforts on core activities of their business, benefits that are typical characteristics of outsourcing, just as the great referent in the procurement field Antonio Ariza, Corporate Procurement Manager at Banco Santander, stated during the early morning of the event, a comment that was subsequently reaffirmed by Jordi Muñoz.