Lizarte – or the procurement revolution

With 40 years’ history, Lizarte is an automotive industry company specialised in the manufacture of a wide range of car spare parts: steering, steering pumps, air conditioning, diesel injection, electric switchboard...
Their production facilities are located in Pamplona and the company has local offices in Spain, Germany and France.
Their main client is the professional spare parts channel.  Their operations are based on three fundamental guaranties: reliability, range, and best service to provide their main client, the professional spare parts channel with quality products, an ever-expanding range or products and an immediate availability.
“When Lizarte contacted us”, says Luis Miguel Jauregui, the Expense Reduction Analysts Project Manager, “the client wanted to undertake a cost reduction project, but was not sure where to start and how to handle the work.”
 
After an analysis conducted by several Expense Reduction Analysts experts specialised in different cost categories, it was concluded that the categories of industrial gases and transport, as well as to a lesser extent, the insurance category, could achieve better results. It was decided to concentrate the analysis and optimisation efforts on those cost categories most likely to bring valuable results. The first conclusion was that in general, for procurement the quality of service would have precedence over the cost and affinity with the real needs of the company. For example, the usual provider of industrial gases had a “comfortable” price policy that was definitely obsolete compared to the average market price. Negotiations led by Expense Reduction Analysts partner Manuel Velazquez led in this case to 57.9% savings with the same supplier, however with much more competitive rates in line with the market.
In the transport and logistics cost category, managed by Luis Valero savings achieved were 45.54% of the total cost category.
 
With Lizarte, Expense Reduction Analysts faced a major challenge besides finding cost reduction in the cost categories analysed: they had to train someone in the company to understand the philosophy of true cost reduction management and apply it within the company once the tutoring over.
 

*****Interview with Oscar Huarte, Director General of Lizarte

What prompted you to engage in collaboration with Expense Reduction Analysts?
I knew about Expense Reduction Analysts’ activity as I saw a presentation at the Chamber of Commerce of Navarre and was surprised by the methodology and system of retribution. A year after this first encounter, I pondered the need to apply this methodology in the company in view of their approach and professionalism as well as expertise in the field.

What is for you the most positive aspect of your relationship with Expense Reduction Analysts?
It is the way they approach a project and the multi-disciplinary team who work in different categories.
In the end, it’s mainly about the trust that develops after working together for a while. It’s a pleasure to discover how they relate to the company’s teams as well as to suppliers, who do not feel threatened by them. I would like to highlight also the high level of confidentiality and sensitivity in the treatment of information.
Expense Reduction Analysts has taken our business interests at heart 100% in all negotiations, maintaining a level of consistency and involvement. Eventually beyond the savings, we have learned a new value and strategic approach in making decisions that will last and this is of utmost importance as they have taught us a new way of negotiating and assessing needs.

What did you think of the education and training project in the procurement function?
Once the success of the project led by Expense Reduction Analysts was assessed, we decided to create the position of Procurement Manager to which we promoted a trusted member of staff and we asked Expense Reduction Analysts to provide training and share their vision and philosophy of procurement management.

 

“With Expense Reduction Analysts there are no risks, only mutual benefits.”

Oscar Huarte, Managing Director, Lizarte

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