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. Raw Material Procurement

Lumi first identified top-purchased items in 2023 that were sourced from multiple suppliers.

2. Vendor Analyisis

Lumi then analyzed the average unit cost by supplier, focusing on identifying inefficiencies and opportunities for cost optimization.

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Result

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.