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Optimization of procurement conditions
Savings in indirect procurement at KÄGI
As part of KÄGI’s procurement optimization, selected product groups were analyzed for savings potential. Significant cost reductions were achieved through several tenders and negotiations.
About the company
Kägi was founded in 1934 and is headquartered in Lichtensteig, in the canton of St. Gallen. The company specializes in the production of premium wafer and chocolate specialities and is best known for its Kägi fret. Kägi produces exclusively in Switzerland and places great emphasis on quality, carefully selected ingredients, and sustainable production processes. The company employs around 140 people and combines traditional craftsmanship with modern technology. Its products are exported to more than 30 countries worldwide and sold through retail outlets, online stores, and international distribution partners.
The project
The challenge
KÄGI faced the challenge of a constantly expanding product range, which led to increasing complexity in procurement. In addition, upcoming investments in the capex area needed to be optimized to reduce costs and realize savings potential. Savings were targeted in the categories of packaging (films, cardboard packaging, and labels), marketing (media placements and tastings), and capital goods (production machinery).
Consulting approach
1. Potential analysis for selected spend groups:
- Conducting interviews to record current procurement practices and identify restrictions
- Detailed documentation of specifications and bills of quantities for relevant product groups
2. Realization of savings:
- Carrying out comprehensive tenders for product groups such as packaging and media placements, with detailed recording of cost drivers to increase cost transparency
- Multi-round negotiations for pre-press services and capital goods, including soliciting bids from alternative service providers
3. Support in contract design:
- Contract drafting support (no legal contract review) to secure the best procurement terms.
Solution and customer benefits
KÄGI achieved significant P&L-relevant savings through improved procurement conditions and a strategically aligned tender process. Costs in the addressed product groups were reduced by a seven-figure amount in CHF.
Conclusion
The measures led to a sustainable optimization of the procurement strategy. In addition to the savings achieved, the results also strengthen the financial basis for future investments.
Your Contact
Dr. Bernhard Höveler
Partner & Managing Director
valantic Supply Chain & Procurement Consulting