Materion has automated its nonstrategic purchasing using Fairmarkit in order to optimize tail spend management. With an average savings of $48k per buyer since implementing Fairmarkit, Materion’s buyers are transforming their buying processes and reinventing their procurement culture.
Founded in 1931, Materion is a global company specializing in high-performance advanced materials. Their products include precious and non-precious metals, inorganic chemicals, specialty coatings, beryllium, ceramics, engineered clad, and plated metal systems. Materion sells these materials to many industries including telecommunications, consumer electronics, automotive, medical, aerospace, and defense. Materion’s materials can be found in products you come in contact with regularly such as smartphones, commercial airliners, cars, and energy-efficient LED lights.
When a new CEO arrived at Materion in 2017, one of his major initiatives was to drive internal process improvements. Consequently, the procurement team had a large task at hand. The team began to analyze Materion’s spend and quickly realized that tail spend was significant—$10 million in spend comprised of nearly 2,500 suppliers. Slowly, they began to chip away at the spend by consolidating vendors and leveraging eCommerce catalogs, successfully optimizing 6% of their tail spend. Although this was an improvement, Materion was still faced with thousands of suppliers who supplied multiple line items each. With a small procurement team, how could they successfully manage and prioritize all of this spend?
“How do you, as a small team, start to address 2,000 suppliers? That was really our question—how do you figure out what it is, line by line, with an average of $5,000 per supplier, some were $10,000, some were $50—how do we consolidate that down? How do we manage it without spending more and more time on it? Where does the value end and the cost begin? We didn’t have a lot of good answers.” — David Yost, Buyer Supervisor at Materion
Gaston Alvarado, Global Category Manager, and David Yost, Buyer Supervisor at Materion, recognized that their biggest challenge was buyers’ time. They needed a solution that could help automate the manual processes for their buyers while helping them address the tail spend in parallel.
“How do you, as a small team, start to address 2,000 suppliers? That was really our question—how do you figure out what it is, line by line, with an average of $5,000 per supplier, some were $10,000, some were $50—how do we consolidate that down? How do we manage it without spending more and more time on it? Where does the value end and the cost begin? We didn’t have a lot of good answers.”
— David Yost, Buyer Supervisor
Materion chose Fairmarkit because the solution solved more of the major pain points still facing the procurement department. Other solutions could only help the Materion team understand their spend, not help them take actionable steps to optimize and improve the efficiency of their tail spend strategy. Gaston recognized this unique opportunity and after working with David to run a small program with the platform, he was able to prove to Materion’s procurement leadership that Fairmarkit could drive immense value. Within just a few weeks, they achieved a return on their investment. These savings put the procurement team on track to exceed their savings goals for the year. Moreover, because of the rapid ROI, Gaston and David were able to expand the amount of spend sourced through the tool.
To ensure a successful engagement, David rolled out the technology to the team of buyers, making sure they fully understood the new technology and how it would work with their current business processes. Within the first six months, Fairmarkit’s tool allowed Materion to source some larger-spend items, achieving significant savings. Fairmarkit enabled Materion to save almost $150k in 100 sourcing events, including both one-time and recurring purchases.
Since adopting the Fairmarkit platform, Materion has seen incredible cost savings and results. They have realized over 15% in average savings on spend passed through the platform, and an average of $48k in savings per buyer. With typical RFQ sizes over $8,000 and an average of 3 bids received per RFQ, Materion has realized an average RFQ savings of over $1,500. Both small and large purchases have delivered savings, including over $28k on a single RFQ. That quote alone helped one of the buyers to achieve their annual savings goal in March.
“If you found one quote for the year that hits your goal in March, imagine what you can do when you automate more processes. This helps you start developing people. And then your employees become more engaged, and this is a balloon of success. Not only do my savings grow, but the plants are happier, and the employees are happier. This is my big vision.”
— David Yost, Buyer Supervisor
In addition to cost savings, Fairmarkit is transforming the way Materion’s buyers are working. David has seen a positive shift with the mindsets of their procurement team—as the buyers are now spending less time on the manual and monotonous tasks of getting quotes approved. Because of Fairmarkit, the buyers are much more engaged in their work and empowered to make more strategic decisions for the business.
“I’ve taken Fairmarkit and the service that it’s offered and I’m building a culture around it to take us into the next 10 years of the business cycle. The business world has grown very impartial, it is no longer person-to-person but business-to-business. So, if we can take that B2B culture BUT keep people engaged, it keeps people involved in the process.” — David Yost, Buyer Supervisor at Materion
Having experienced firsthand the impact Fairmarkit has had on their ability to meet savings goals, the Materion Procurement Team is also pushing for their SAP Ariba instance to be integrated directly with Fairmarkit. Gaston and David are excited that Fairmarkit has empowered their team and inspired them to take initiative in championing further adoption of technology. The success of Fairmarkit has allowed the procurement team to be more aggressive in terms of pursuing and achieving technology, strategic, and internal initiatives. Materion not only automated its nonstrategic purchasing processes and optimized tail spend management but transformed its procurement culture with Fairmarkit.