Case study >

Total Cost of Ownership at a Fortune 500 Consumer Goods Company

January 20, 2025

KPIs

2-16%

Reduction in TCO and Acquisition Costs

18-32%

Improvement in Planner and Buyer Productivity

15x

Improvement in RFQ Documents Processed

Overview

A Fortune 500 U.S. tool manufacturer in the U.S. with a diverse set of products and services and large network of suppliers. The existing means for assessing total cost of ownership (TCO) of its products was a complex and very manual process, involving multiple disconnected systems and processes. As a result, the procurement team had significant challenges in evaluating the performance of their strategic sourcing initiatives. More specifically, (1) determining the total cost of ownership for its various products and (2) assessing the total cost impact from supplier quotes. TADA’s TCO solution revolutionized the customer’s strategic sourcing, offering comprehensive visibility of costs beyond landed costs. TADA provided streamlined analyses, automated data enrichment, and real-time insights to empower the procurement organization to swiftly and sustainably achieve enterprise cost goals. With a digital twin of their entire strategic sourcing process, the customer was able to optimize total cost of ownership for its products.  

Customer Challenges

Due to the disconnected systems & processes, analysts manually reviewed RFQ documents and analyzed data, all information about cost wasn’t connected to specific products, and procurement collaborated through emails & phone calls. This substantially limited the visibility into the customer’s strategic options related to sourcing decisions. Consequently, this highly manual and inefficient process resulted in delayed decisions that impacted cash realization, increased labor costs associated with managing the process, decisions that weren’t based on the full cost of the component, and delays in execution with ripple effects across other operational functions.

Solution

Define RFQ Packages:

Create scenarios around the cost and the strategic levers that drive total cost for products, considering part number, manufacturing plant location, current supplier, estimated annual usage and historical costs.

Supplier Quote Integration & Modeling:

Integrate quotes received from suppliers as a part of the RFQ process, configure cost models for the customer’s unique business rules, and assess risk of switching to a new supplier.  

Supplier Cost Comparison:

Seamlessly compare costs across supplier by cost category, flag outliers, and determine cost minimizing suppliers

Strategic Sourcing Workflows:

With real-time visibility to cost impact, analysts can quickly identify reasons to accept or reject a quote and collaborate with team members.

Consolidated Process Metrics:

Access unified, real-time insights into key metrics for complete visibility and control over your strategic sourcing process.

Results

Total Cost of Ownership

The customer was able to see a 12-16% reduction in TCO and acquisition costs.  

Analyst Efficiency & Productivity Gains:

Planner and buyer productivity improved by 18-32%. Previously, planners and buyers had to manually review documents, perform manual excel analysis that was not standardized, sift through RFQ documents to uncover hidden opportunities. TADA automated most of these processes, enabling digital collaboration in real time and resulting in a 15X improvement of the number of RFQ documents processed, exceptions flagged, and decisions made.  

Conclusion

TADA's TCO Application successfully addressed the customer’s challenges by enhancing visibility, automating manual processes, and enabling real-time collaboration. As a result, the customer reduced costs by 12-16% and increased planner and buyer productivity by 18-32%. TADA's solution streamlined cost comparisons, reduced inefficiencies, and enhanced collaboration across procurement processes.