PEL Appliances is a large-scale manufacturer and assembler of home appliances including refrigerators, air-conditioners, and deep freezers. The company procures a wide range of pre-built components and assembles them together with its own in-house manufactured IP to produce high-end, ultra-efficient home appliances. Components that go into the company's products include compressors, electrical circuitry, LED displays and controllers, numerous other parts, each sourced from different suppliers.
The high volume of components that need to be procured requires PEL Appliances to maintain a large procurement team that can engage, liaise, and coordinate with suppliers. Minimizing component costs is critical to sustaining the company's margins in the competitive home appliances industry. To this end, the company needs to ensure that it is effectively negotiating with suppliers on each and every item procured to minimize the purchase costs.
The sheet volume of procurement, however, imposes huge time demands on the team when it comes to negotiating with each supplier. Moreover, time constraints and deadlines limits the ability of the procurement team to effectively negotiate prices and terms individually.
PEL appliances requires a systematic and robust tool to support its team in running negotiations with suppliers, ensuring a standardized process of counter-offers, price revisions and iteration to bring prices down. PEL also needs to have the negotiation discussions documented for subsequent review and reference. Attaching lengthy email correspondence has proven challenging and cumbersome.
By using Proqura, PEL Appliances was able to implement protocols for structured negotiation with its suppliers on all procurement, large or small.
On receiving offers from suppliers, Proqura's evaluation module enables buyers to submit a counter-offer with rationale or request a revised offer from suppliers. Any discussion and conversation with suppliers conducted through Proqura's messaging platform is also linked to the transaction and recorded for visibility.
The mechanism of offer, counter-offer, revised offer and negotiation enabled PEL Appliances to make its team work to further reduce prices whereever possible.
Consistent and proactive negotiation on all key procurement categories enabled PEL Appliances to bring down its procurement costs a further 3% on average from the lowest initial offer received.