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August - 2008 - issue > Cover Story

Corbus: Transforming SCM

Jaya Smitha Menon
Thursday, August 7, 2008
Jaya Smitha Menon
A leading oil and gas manufacturing company, traded on NYSE, was facing a major challenge within its supply chain as it was growing exponentially year on year. The challenges involved higher operational costs, inflationary cost pressures for materials and equipment, Purchase Order Backlog, timely transaction processing & file maintenance, delivery management and cost increases in logistics and related SCM issues. When considering all available options open to bring immediate and sustainable cost reductions and process improvements, the solution that quickly surfaced was outsourcing some or all components of their supply chain. However, the company was apprehensive to outsource to a third party as their research indicated that many outsourcing programs had fallen short in their ability to provide sustained cost savings, optimized processes, strategic decision-making and bringing continuous improvement and innovation. This company wanted to explore the option to outsource some or all of their procurement functions with the expectation of actualizing a substantial and sustained cost savings for all products and services, improved compliance as well as obtaining best practices, processes and programs for their supply chain. They also expected the outsourcing service provider to innovate their procurement practices and streamline operations by eliminating manual, duplicate, non-value added and inconsistent processes.

It was at this point that the company got engaged in a dialogue with Corbus which specializes in optimizing client’s supply chain management through best in class SCM and IT outsourcing services. What attracted this organization towards Corbus was the quality of supply chain transformation services that they offered were well suited to their requirements. The Corbus team was engaged and quickly provided immediate results by performing a quick business process assessment, detailing the process maps using Six Sigma and prioritizing the deliverables. It also put in a small team of Subject Matter Experts at the client locations to act as an extension of the client teams. These teams immediately started reducing the bottlenecks like Backlog of open requisitions and then maintained that Service level moving forward. Corbus also provided support of the sales order entry and allocation of parts in stock in the system, implemented centralized customer care, best in class commodity expertise, strategic sourcing and incorporated best practices into the supply chain. By doing so, the client achieved operational cost savings of 40 percent and product cost deflation ranging from 6-10 percent. Moreover, the client gained more value in terms of quality, compliance and delivery. The company also recorded the best growth in the quarter in terms of revenue and profitability.

“We always engage with any client by promising 20 percent operational savings, even without moving work out of the country”, explains Rajesh Soin, President and CEO. Soin goes on to share another example of working with one of the fortune 500 companies. “There are 100 engineers working between US and India. We have had no cost increase for the last nine years and internally we have reduced their cost by 40 percent during the course of our engagement”.

Corbus specializes in both tactical and strategic areas of Supply Chain Management. Irrespective of Industry verticals, the procurement function is something, which gives immediate scope of cost reductions. Typically, companies spend from 40-60 percent of their budget on direct and indirect spend for required materials and services. Research shows that in a typical Procurement process flow, we will find that buyers spend almost 60 percent of their time and resources performing non-value added tactical and administrative tasks rather than strategic work. Hence in order to put more focus on their strategic activities, companies are looking at the option of outsourcing their different Procurement functions and processes. These functions and processes may vary from sourcing and commodity specialization to value and product quality engineering. Order management, order fulfillment, compliance management, planning, expediting, material logistics, system and file maintenance, catalogue management, IT and spend analysis are just some of the components.

For one of the large customers (Global leader in aircraft engine manufacturing headquartered in the US), Corbus has successfully managed more than $1.5 billion of spend in direct materials over the period of the contract. “If you look at the productivity benefits and enhancements or even reduction of their cost, we are considered to be one of their Centers of Excellence, despite the fact they have their planning operations outsourced to another firm. This was the first contract in the Supply Chain Management area 14 years ago and Corbus has been a pioneer in providing these services ever since that time” says Soin.

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Reader's comments(4)
1:It is nice article
Posted by: Pankaj Pandeys - 25th Aug 2008
2:This is to inform you we got your contact through your site and so we are interested in your products to buy and supply to our local clients
Posted by: Smith Lawal - 12th Aug 2008
3:Nice article....
Posted by: - 05th Aug 2008
4:this article is very instring and to know the trnsforming Supply Chain Management and Quaality cost delivery and compliance it is usefull for the business people to how to reduce the internal cost and it is also usefil for management students .
Posted by: venkat venku - 04th Aug 2008
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