With plants and sales subsidiaries in 74 countries and a footprint across Europe equivalent to that of 45 football fields, Samsung Electronics is well accustomed to the complexities that come with managing multi-layered and interconnected supply chains. But even for one of the world’s largest producers of high-tech electronic devices and appliances, uncovering new ways for tendering processes to be streamlined, logistics costs reduced, and advantages gained over competitors is of utmost importance to keep business thriving.
Following an internal benchmarking study in 2019, the South Korean headquartered multinational set out to see how e-sourcing technology could uncover improvement opportunities in their transportation sourcing as manufacturing resources become scarcer and the scope of the business becomes greater.
In a nutshell, explained Contracts & Innovation Manager at Samsung, Radu Panciuc, his team was looking to see if e-sourcing tools could help them to “work smarter”. Taking part in a June 2021 webinar co-presented by Keelvar, Radu outlined how a combination of upgraded technology and process improvements enabled Samsung to transform their transportation sourcing, and how their e-souring tool partner of choice – Keelvar – worked with them to address their needs and provide ongoing support as they further adopted advanced optimization technology.
Here are some top takeaways from the webinar:
Takeaway 1: Samsung Considered 5 Vital Criteria When Evaluating E-Sourcing Solutions
With standard desktop tools and legacy software a key component of Samsung’s prior sourcing strategy, crucial to selling e-sourcing technology to Samsung stakeholders was proving how it could streamline processes without burdening the team with additional workloads. During his webinar presentation, Radu explained that the first stage in selection an e-sourcing solution was for his team to consider:
Once a selection of tools had been shortlisted, Radu’s team developed a solution evaluation criteria under the headings of (1) cost efficiency, (2) flexible licensing, (3) quick implementation, (4) efficient training, and (5) contract duration to present the solutions for internal approval:
From the shortlisted providers, Keelvar’s Sourcing Optimizer was well received and chosen as the ideal fit for Samsung’s highly strategic, large-scale spends that are much more complex in nature than typical annual sourcing events. This led to the establishment of a partnership between Keelvar and Samsung in December 2019.
Takeaway 2: Samsung’s First Tender with Keelvar was Also Their Largest RFQ to Date
For Samsung, Radu said, the goal was to start their sourcing optimization journey with Keelvar on the right step by showing suppliers and senior stakeholders that the technology was the best way forward. And what better way to prove the advantages of sourcing optimization than to launch their largest tendering process to date at that time:
“It was the most complex RFQ [€100 million worth of spend] that we launched as the first tender with Keelvar – and things went well,” Radu explained.
Samsung’s first year in partnership with Keelvar was seen as a “learning year” for getting Radu’s teams up to speed with Sourcing Optimizer, with around 20 RFQ events ran in Keelvar and over €200M in spend. Radu said 2021 will be a “standardization” year with more buyers running more events across more categories (such as packaging) through Keelvar.
Takeaway 3: E-Sourcing Optimization Has Enabled Samsung to Focus on Results, Not Process
Samsung’s largest spend – outbound transport – can fall in the region of €100-200 million annually, and it also has the highest potential for savings. By using an advanced optimization tool, Samsung has uncovered savings of between 3% and 5%, in addition to 75% to 85% time savings in building, running and evaluating RFQs.
Now as tenders become more complex due to COVID-19 and the effect the global microchip shortage is having on virtually every company that requires a semiconductor in manufacturing, Sourcing Optimizer’s ability to model the complexities that sourcing teams are facing in the real world has taken some responsibility out of the Radu’s teams’ hands, enabling them to focus on more on “the results and not the process.”
“We have more brain capacity to think about the results or the strategy for negotiation, and so that's really the process.”
But irrespective of how powerful an e-sourcing solution is, it’s of little use without adoption by the team members who can unlock the most benefits for the business by using it. Another advantage of using Keelvar’s optimization tool for Samsung, according to Radu, has been the ease of onboarding new users.