Context

The client, a manufacturer of high-performance suspension systems for off-road vehicles, faced compressed margins due to fragmented procurement and high input costs from local suppliers. A strategic supply chain overhaul was necessary to improve cost efficiency without compromising product quality or delivery timelines.

Approach

The engagement focused on strategic sourcing consolidation to reduce procurement costs and increase control over supplier performance and pricing.

1. Vendor Consolidation Strategy

• Identified high-volume bought-out components accounting for the bulk of raw material spend.

• Evaluated international sourcing options and shortlisted a single supplier in Mexico that could meet volume, quality, and logistical requirements.

• Consolidated >95% of total procurement with the chosen vendor to achieve economies of scale and increase leverage in pricing discussions.

  
  

2. Strategic Interdependency

• Structured the engagement with the Mexican supplier to create mutual reliance, ensuring alignment in operations, delivery timelines, and cost stability.

• Implemented quality control and coordination processes to manage overseas procurement risks and maintain operational continuity.

  
  

  
  

Results

• 3% Increase in Gross Margin driven by procurement cost reduction

  
  

• Improved pricing predictability and vendor accountability due to strategic consolidation

  
  

• Reduced variability in lead times and part quality through tighter coordination with the supplier

  
  

• Streamlined vendor management, freeing up internal bandwidth for core operations

  
  

Conclusion

In specialized manufacturing, sourcing isn’t just about cost — it’s about building strategic supplier relationships that unlock long-term control and efficiency. This intervention allowed the client to stabilize input costs and drive sustainable margin improvement.