How Lumi helped a textile manufacturer reduce raw material procurement costs by 38%
Lumi AI provided a crucial advantage for a textile manufacturer by identifying significant price discrepancies across raw material suppliers
Challenge
In the competitive textile landscape, managing procurement costs efficiently is crucial for maintaining profitability.
Solution
Using Lumi, the team implemented a two-step analytical approach to find suppliers charging more for the same raw materials.
Result
Through strategic supplier consolidation, the company saw a remarkable 38% reduction in procurement costs!
Challenge
In the competitive textile manufacturing landscape, managing procurement costs efficiently is crucial for maintaining profitability.
The challenge for our client was twofold: managing a vast portfolio of approximately 20,000 raw materials and navigating a complex network of suppliers through their SAP ERP system.
The lack of insight into price variances for identical materials resulted in missed opportunities for cost savings, compounded by the sheer volume and complexity of procurement transactions.
Solution
To tackle these challenges, the manufacturer user Lumi AI, an advanced analytics solution designed to streamline data analysis and uncover hidden savings opportunities within procurement operations using plain language prompts.
Lumi's integration with the client's SAP ERP system enabled real-time access to procurement data, providing a comprehensive view of purchasing activities.
Using Lumi, the team implemented a two-step analytical approach:
1. Comprehensive Analysis of Purchasing Data
Lumi first identified top-purchased items in 2023 that were sourced from multiple suppliers.
2. Comprehensive Analysis of Purchasing Data
Lumi then analyzed the average unit cost by supplier, focusing on identifying inefficiencies and opportunities for cost optimization.
Results
The strategic insights provided by Lumi AI optimized the textile manufacturer's procurement strategy.
By consolidating their purchases of materials to suppliers with more favorable prices, the client realized a dramatic reduction in raw material procurement costs by approximately 38%. This significant cost saving directly improved their bottom line, enhancing competitiveness in a challenging market.
Lumi allowed us to identify those items purchased in same month from different suppliers. This helped us negotiate better with our vendor and improve procurement efficiency by ordering more from cost effective vendors.
