Procurement Tactics

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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Procurement Strategy Case Studies — 5 Insightful Examples

Table of content

  • InDemand’s co-creation model
  • Copenhagen supplies seasonal and diverse organic fruit and vegetables
  • Catalonia’s aim to clean air
  • The Ministry of Defense of the Kingdom of the Netherlands procuring textiles
  • Combining procurement models
  • Procurement Expert’s Insights 
  • Frequently Asked Questions
  • Successful strategies depend on efficient coordination and collaboration between essential procurement players. 
  • Aligning these strategies with broader procurement standards helps improve their lasting impact in the field and environment. 
  • Knowing the factors affecting procurement strategizing helps build better procurement outcomes for the company.

Setting the appropriate strategy in procurement is the first step to improving control and effectiveness of the procurement and sourcing activities. However, not everyone knows where to start in their strategy. 

In this article, we will check five procurement strategy case studies that can give you insight into strategies they have used to streamline their processes. We will explore the problems that arise and how they have conquered them with their strategy. 

After reading this article, you will gain enough knowledge on tackling the problems in your procurement by formulating your very own strategy. So, I’d like to make your procurement process more effective than before!

Example 1 — InDemand, Co-creation Model Helping to Procure Innovation in Public Organizations

Actual case:.

InDemand brought together procurers from three different European Regions namely: Murcia, Oulu, and Paris to test a new co-creation model which is said to be a model that is faster, leaner, and requires fewer resources and overheads. Thus, being more suited to everchanging technologies, such as digital solutions. 

InDemand aims to help promote innovation by combining what the clients need (health professionals of the Murician Health Service), and the development of the solutions in the process of co-creation (a collaboration of health professionals together with tech companies). 

The Murician Health Service (EPICO), used the InDemand model to know the challenges of enhancing accessibility for and follow-up epileptic patients. Thus, a call to companies to co-create an innovative solution alongside clinicians commenced. 

After a tender process was launched, Oxiframe (renamed Aircrum IT) was selected to work together with neurologists and patients. After the engagement process, Servicio Murciano de Salud (SMS) prepared an open tender for a solution. Thus, a bigger company named PULSO won the bid and collaborated with Oxiframe to make an innovative solution. 

Final Deal:

The InDemand model has been leveraged to more than 50 procurement innovation projects. It is estimated that more than 200 organizations submitted a bid for the different calls based on the InDemand model from the numerous procurement organizations. 

Additionally, there was a 100% acceptance of the tool which was found to truly help improve communication between doctors and their patients affected by epilepsy. It has heightened patient satisfaction by up to 50% and led to a quality of life improvement for direct communication between doctors and their patients. 

After the success, it was then tested on 54 patients at the Hospital of Cartagena for 2 months and eventually tested on a wider group. Thus, it is a great example of how to use a co-creation model with companies together with clinicians and their patients. 

What Can We Learn From It?

We can learn here that demand-driven co-creation works, at least in the healthcare sector, to address the problems perceived by parties involved in the creation of a solution. 

Together with the clinicians and the patients, the collaboration worked well. The exchange of ideas, needs, solutions, standard practices, and legal limitations has become a valuable component to co-create an innovative solution. 

Example 2 — The City of Copenhagen Supplying Seasonal and Diverse Organic Fruit and Vegetables

Copenhagen, the most populous city of Denmark, has set a target for 90% of the food served in municipal facilities to be organic. It has also ensured that it was buying seasonal produce to support efforts of strengthening biodiversity in agricultural production in both Danish and foreign producers. 

It is important to note that “seasonality” is not meant to be the seasons in Denmark. Rather, it defines the season somewhere in the world helping to ensure fairness and transparency. 

Furthermore, an extensive market engagement was conducted to ensure the requirements were ambitious and also achievable. The bidders were also asked to complete the “seasonal wheels’ to demonstrate the varieties of the typically used products available throughout the year. 

The first contract was issued in January 2014. However, the tender was abandoned due to multiple errors seen in the bids. The contract was reissued in April 2014. Seven tenders were then submitted and only two of those met the requirements. After that, the contract was awarded in July 2014. 

The innovation in the supply and delivery of products, improved relationships with the suppliers, and greater sustainability initiatives in sourcing food were all positive results of the extensive market dialogue. 

Additionally, the organic food market in Denmark has remarkably grown in recent years and the organic food service market increased up to 33% between the years 2013 and 2014. 

We should take note that there is a risk in carrying out the innovation procurement process that is susceptible to being abandoned due to a lack of competition. The extensive market engagement Copenhagen has done can be time-consuming. 

However, by building a strong knowledge of the market, it is achievable to produce realistic yet innovative specifications or requirements to attract necessary competition. 

Example 3 — Catalonia’s Aim to Clean Air through Clean Vehicle Procurement

Catalonia is an autonomous region in Spain. Its government has passed the responsibility for certain legislative and policy areas, including the environment. The Ministry of Territory and Sustainability is the expert body for environmental policies and leads the promotion of Green Public Procurement in Catalonia. 

The Catalonia government uses GPP to support numerous strategic policies such as reducing negative impacts of consumption and production, promoting eco-innovation and transformation, and supporting other policies that pursue sustainable objectives. 

The government of Catalonia focuses on low-carbon vehicles that align with wider environmental priorities within the region. Air pollution is a specific concern within the wider urban area of Barcelona where nitrogen oxide exceeds the annual limit. 

An Air Quality Plan of the Metropolitan Area of Barcelona has brought 40 municipalities together to solve the air pollution problem. Catalonia’s Government approach to combat air pollution is to provide guidelines on the GPP vehicles, government agreements regarding GPP, eco-labeling to identify low-carbon vehicles and the LIVE platform which is a public-private platform promoting sustainable mobility. 

The GPP guidelines laid out clear and simple criteria that public procurers procurement can follow to buy low-emission vehicles, as well as consider the use of vehicle fleets in the delivery of service contracts. It also includes the maximum energy consumption and technical specifications of the award criteria. 

Additionally, the Catalonia government supports the Catalan Ecolabelling. It is a regional voluntary ecolabel awarded to products and services that fulfill specific environmental quality requirements beyond what is compulsory under the current regulations. 

The result of vehicle-related tenders in the Catalonia region has produced positive impacts on the environment. It is estimated that through its procurement strategy, it has produced energy savings of 2,120 Tons of Oil Equivalent (TOE) and a reduction of 7,166.7 tons of carbon emissions compared to benchmark levels. 

Catalonia’s government approach demonstrates that procurement can play a significant role in contributing to wider environmental policies and public health goals. 

Additionally, by aligning the EU national and regional policies, it is achievable to send a clear message to markets and the citizens of Catalonia about the importance of the environment through sustainable activities. 

Procurement Learning Journey Assessment

Example 4 — The Ministry of Defense of the Kingdom of The Netherlands Procuring Textiles Made From Recycled Fibers

The Ministry of Defense of the Kingdom of the Netherlands (MODNL) is a large public sector buyer that employs around 58,000 people across the army, military police, air force, and other supporting roles. 

It is also one of the 45 public sectors and private parties brought together by the Dutch Government’s Circular Procurement Green Deal, tasking participants in carrying out two circular procurement initiatives between the years 2014 and 2016 to increase knowledge and accelerate the transition to a circular economy. 

One of the areas of focus of MODNL was textiles because it needed to equip its large numbers of personnel with uniforms and other textile products. However, textile production is linked with numerous environmental and social problems. Ultimately, the energy to transform raw materials and manufacture new fibers in the production of textiles has great carbon emissions. 

Therefore, the MODNL began exploring the market for recycled textiles in January 2014 by publishing a request for information and conducting an open meeting with the textile suppliers. This market engagement aimed to know if it is possible to require recycled fibers to be used in the production of certain items. 

Through its market research , it identified that manufacturers were able to meet the requirements around the use of recycled content. However, MODNL must focus on the items’ ability to perform their use rather than the technical values such as the tensile strength. 

The contracts awarded in June 2016 are worth approximately $455,000 for towels and washcloths and $1.46 million for overalls. Only six suppliers submitted their bids and only four of them met the tender requirements. 

Now, two Belgian companies supply the MODNL with towels, washcloths, and overalls. The parties will innovate during the four-year term which could result in a higher percentage of recycled materials later on in the execution of the contract.

Subsequently, a separate eight-year contract was also signed for reuse services where a third party was contracted to sort items of clothing for reuse and resale with income being returned to MODNL. Thus, it results in considerable savings for the MODNL.  

Circular procurement needs suppliers to find alternative inputs and new ways of working. Thus, to assist innovation, the market engagement conducted by the MODNL found that functional rather than technical specifications provided suppliers with more space to innovate and find new ways to meet the MODNL’s material needs. 

We can learn here that when asking the market to work with new materials or in an innovative way, it is necessary to give them more lead-in and response time to consider and prepare non-traditional offers. 

Moreover, it is important to take note that you should not introduce price ceilings based on existing prices, and costs, as expected on a pilot test, can constrain the development potential of new areas. 

Example 5 — Combining Procurement Model For Sustainable Buildings

The South Moravian Region has over a million inhabitants and is the fourth-largest region in the Czech Republic. The landscape of the region is distinguished by its highlands as well as the Moravian Karst. The abundance of caves and gorges provides ideal conditions to treat respiratory diseases. 

The regional government aims to build a new treatment facility for respiratory diseases near the town of Ostrov u Macochy. The procurement approach was set up to give the market the chance to show the best they can offer to create the building as aesthetically pleasing, energy-efficient, and a comfortable place for patients. 

The process includes preliminary consultation and market dialogue to test the feasibility of the procedure and to provide a detailed description of the planned procurement process and requirements of the tenders. 

Furthermore, the procurement procedure combined various methods to filter the bids. The tender itself was awarded using a combination of a competitive procedure with negotiation and an architectural design contest. 

The preparation of the tender process started in April 2018 and the procurement commenced in April 2019 with a total contract value of $6 million. 

Seven suppliers submitted their bids which were to be assessed by an expert independent evaluation committee that recommended the exclusion of one supplier due to flaws in its bid. 

The remaining were then evaluated according to set criteria which are based on the reports of the expert examiners who examined in detail the values offered in the quality of technological and energy solution criteria. 

The contract was awarded to the selected contractor in April 2020. Since then, the construction started in June 2021 and is expected to be done by the end of 2022.

The winning bidder offered numerous sustainable solutions including reusable components of the main construction and interior design layout that enables simple layout adjustments that may be done in the future. The successful bidder also committed to achieving a reduction in the annual consumption of non-renewable primary energy. 

We can learn here that preliminary market consultations are crucial when the contracting authority undertakes a new approach to procurement. Additionally, it is important to present the intentions and goals to potential suppliers, get feedback from the market, and find other information significant to prepare the procurement process. 

All parties involved in the preparation of the actual procurement process were sent a request to identify the strengths and weaknesses of the procurement process they utilized. 

Using the BIM method leads to better execution and more efficient operation of the building. Furthermore, as the tender used numerous methods, it is significant to see the effectiveness of the DB approach as it can be an interesting and legitimate way for contractors to implement large-scale projects. 

Procurement Expert’s Insights on Procurement Strategy Case studies

For this article, we asked an experienced procurement expert to share her insights to help answer common questions about case studies regarding procurement strategy.

Nesrin Chabbah Senior Lead Buyer

LinkedIn Profile: linkedin.com/in/nesrin-chabbeh

1. What do most people get wrong about procurement strategy case studies?

“What’s commonly misconceived about procurement strategy, as evident in the given cases, is its potential to profoundly influence organizational objectives beyond mere acquisition efficiency. Procurement transcends simple procurement; it’s a strategic instrument capable of propelling innovation, sustainability, and social advancements. These examples underscore how procurement, when meticulously strategized and implemented, can yield positive effects not just on operational efficiency but also on the environment, public health, and society at large. It involves harmonizing procurement with grander visions and engaging stakeholders for impactful results.”

2. What should people know about procurement strategies if they are planning to start working on this?

“For those embarking on the journey of devising procurement strategies, understanding that it’s not merely about obtaining goods and services is pivotal. Procurement strategy extends to shaping innovation, sustainability, and social responsibility. Effective strategies align with broader organizational goals, incorporating sustainability, ethical sourcing, and fostering supplier relationships. Engaging stakeholders and fostering transparency is vital for success. Moreover, the ability to adapt strategies to emerging technologies and market shifts is essential for staying competitive and achieving long-term success in procurement.”

3. From your experience, what is the most important thing you learned about procurement strategy case studies?

“The core lesson in mastering procurement strategy is understanding its dynamic and multifaceted nature. It extends beyond the efficient acquisition of goods and services; it encompasses supply chain optimization, innovation encouragement, sustainable practices, and fostering strong supplier relationships. Crafting an effective strategy demands comprehensive knowledge of market dynamics, legal considerations, risk mitigation, and emerging technologies. Flexibility and adaptability are paramount, as strategies must evolve in response to evolving business landscapes and shifting consumer demands. Ultimately, a well-crafted procurement strategy profoundly influences an organization’s overall performance and its capacity to meet objectives both effectively and responsibly.”

4. What tips can you give them to be effective in procurement strategies?

“To ensure an effective procurement strategy, it’s crucial to align with organizational objectives and understand needs and goals thoroughly. Employ data-driven decision-making, leveraging insights for optimal choices. Prioritize risk management by identifying and mitigating potential supply chain risks. Cultivate strong, transparent relationships with suppliers, adhering to compliance and ethical standards. Foster a culture of continuous improvement, integrating sustainability practices, and optimizing costs through strategic negotiations. Maintain clear communication channels and invest in team training for skill development. Regularly measure performance and adaptability, embracing change as a part of the process. By following these guidelines, you can enhance your procurement strategy and achieve better outcomes.”

5. Can you give us examples of procurement strategy challenges and how you solved them?

“Monitoring supplier performance and their resilience posed significant challenges. However, implementing Key Performance Indicators (KPIs), conducting monthly meetings, improving communication, and setting clear goals engaged suppliers, fostering responsibility and driving them to deliver their optimal results.”

The five insightful procurement strategy case studies offer valuable lessons for organizations seeking to enhance their procurement processes.

These case studies emphasize the importance of understanding market dynamics, engaging stakeholders, aligning procurement with broader policy objectives, and fostering innovation through collaboration.

By drawing insights from these examples, organizations can tailor their procurement strategies to address specific challenges and achieve more effective and sustainable outcomes.

Frequently asked questions

What is a procurement strategy case study.

A procurement strategy case study is a real-world example of how organizations buy things, showing the challenges and choices they face.

What types of procurement strategies are commonly explored in case studies?

Case studies may cover a range of procurement strategies, including strategic sourcing, supplier relationship management, e-procurement, cost optimization, and sustainability initiatives.

What can organizations learn from mistakes in case studies?

Case studies highlight mistakes made by others, offering useful insights into what went wrong and how to avoid similar issues for better outcomes.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics

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In fact, at one conference this spring, after delivering a keynote presentation that had nothing to do with technology, the very first question I received from the audience was “What do you think about blockchain and its potential in supply chain management?”. IBM Case Study : Supply Chain Intelligence, Watson, and Resolution Rooms.

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Real Estate Leader Centralizes Procurement, Saves 20% on Addressable Spend

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Improving Procurement: A Case Study

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Improving Procurement: A Case Study

BSTPortal.com Buy Sell Trade BSTPortal.com: Benefits Program 90-DAY FREE TRIAL PERIOD BSTPortal.com has the Business Turnkey Solution, which provides information,

procurement case study ppt

Chapter 14 Managing Your Money Chapter 14 Managing Your Money Lesson 14.2 You, the Consumer Lesson 14.2 You, the Consumer.

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PROCURING LOCALLY GROWN PRODUCE. Why Choose Locally Grown  Freshness  Holds longer in storage  Shipping costs may be lower  It can help your community.

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ATTENTION This presentation breaks down the purchasing process into 6 steps, which are then detailed in the subsequent slides. While responding from either.

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PURCHASING 101 HOW TO BEGIN. Is the purchase available from the District Warehouse?  Online catalogs are/will be available on the district web page for.

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VENDOR BREAKFAST May 1, Christine Gerlach, Director Purchasing Maria Ontiveros, Director Accounting John Birkelbach, District Legal Sloan Harris,

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School District Purchasing. Purchasing Authority Arizona Statutes Arizona Statutes Arizona Administrative Code Arizona Administrative Code  Primary source.

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2014 Reliance Manufacturers Rep Meeting AGENDA: Customer Relations Overview Manufacturers Rep Expectations Overview Quarterly Review Discussion Commission.

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Marketing Research. Monday, February 23 Give a couple examples of Marketing Research. Give a couple examples of Marketing Research. Why do you think Marketing.

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Formal Procurement 1 Develop menu 2 Develop product list and food descriptions 3 Conduct product research 4 Estimate usage quantities 5 Develop bid documents.

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Chapter Thirteen Marketing: Helping Buyers Buy Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

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Turning procurement around: 6 case studies of success.

Welcome to our blog post on turning procurement around! In today’s fast-paced and competitive business landscape, effective procurement strategies are crucial for organizations looking to stay ahead of the curve. However, many companies struggle with their procurement processes , leading to increased costs, missed opportunities, and strained supplier relationships.

But fear not! In this article, we’ll dive into six inspiring case studies of successful procurement transformations that have revolutionized some of the biggest players in various industries. From automotive giants like Ford to tech titans like Samsung and IBM, these organizations have overcome challenges and implemented innovative approaches to achieve remarkable results.

So if you’re ready to discover how these industry leaders turned their procurement woes into triumphs – grab a cup of coffee and let’s get started! We guarantee you’ll walk away with valuable insights on how your organization can do the same. Let’s dive right in!

The Problem with Procurement

Procurement, despite its importance, can often become a complex and inefficient process for organizations. The problem lies in the numerous challenges that businesses face when trying to manage procurement effectively .

One of the primary issues is a lack of visibility and transparency throughout the procurement cycle. Without clear insight into supplier performance, pricing structures, and contract terms, organizations struggle to make informed decisions. This leads to increased costs and missed opportunities for savings.

Another challenge is ensuring compliance with regulatory requirements and ethical standards. Organizations must navigate a web of regulations while also upholding their values and promoting sustainable practices. Failure to do so not only exposes companies to legal risks but also damages their reputation among stakeholders.

Moreover, poor communication between departments within an organization can hinder effective procurement management . When different teams operate in silos without sharing information or collaborating closely, it becomes difficult to align goals and optimize processes.

Additionally, outdated technology systems contribute to inefficiencies in procurement operations . Manual processes like paper-based documentation or legacy software solutions slow down workflows and create room for error.

Furthermore, managing supplier relationships can be a daunting task if not handled properly. Building strong partnerships requires proactive engagement, effective communication channels, negotiation skills, and mutual trust – all of which can be challenging without proper strategies in place.

Limited access to accurate market intelligence poses yet another obstacle in successful procurement management . Without real-time data on market trends or competitive pricing information across suppliers/vendors/products/services/regions – businesses may find themselves making suboptimal purchasing decisions based on incomplete information.

These are just some of the problems that organizations encounter when it comes to procurement management. However daunting they may seem though – fear not! We will explore how industry leaders have overcome these obstacles through our case studies next! Stay tuned for some inspiring success stories from Ford, Samsung, IBM Boeing,and Nestle that will surely spark ideas for turning your organization’s procurement around!

Case Study #1: Ford

When it comes to turning procurement around, Ford stands as a shining example of success. The automotive giant recognized the need for change and took decisive action to transform its procurement processes.

Ford focused on enhancing supplier relationships. They understood that strong partnerships were crucial for sourcing high-quality materials at competitive prices. By engaging in open and transparent communication with suppliers, they built trust and fostered collaboration.

Additionally, Ford implemented advanced technology solutions to streamline their procurement operations . This allowed them to automate manual tasks, reduce errors, and improve efficiency. With real-time data analytics and reporting capabilities, they gained valuable insights into their supply chain performance.

Ford also prioritized sustainability in their procurement practices by promoting environmentally friendly sourcing initiatives. By working closely with suppliers who shared their commitment to sustainable practices, they were able to reduce carbon emissions and minimize environmental impact throughout the value chain.

Furthermore, Ford embraced innovation by leveraging emerging technologies such as artificial intelligence (AI) and machine learning (ML). These technologies enabled predictive analysis of market trends, optimizing inventory management strategies.

In conclusion without concluding or summarizing anything specific about Case Study #1: Ford , this case study highlights the importance of strategic partnerships with suppliers, technological advancements in procurement processes,and a focus on sustainability and innovation for successful turnaround in procurement operations.

Case Study #2: Samsung

Samsung, the South Korean multinational conglomerate, faced significant challenges in its procurement processes. However, through strategic initiatives and innovative approaches, they successfully turned their procurement around.

One key aspect of Samsung’s success was their focus on supplier relationships. They recognized that building strong partnerships with suppliers would result in better quality products and improved supply chain efficiency. By collaborating closely with suppliers and establishing open lines of communication, Samsung was able to streamline their procurement operations.

Additionally, Samsung implemented technology-driven solutions to enhance their procurement processes. They leveraged data analytics and automation tools to gain insights into supplier performance and identify opportunities for cost savings. This enabled them to make more informed decisions and optimize their sourcing strategies.

Furthermore, Samsung prioritized sustainability in their procurement practices. They actively sought out suppliers who adhered to environmentally-friendly manufacturing processes and ethical labor standards. By incorporating sustainability criteria into their supplier selection process, they not only reduced risk but also enhanced brand reputation.

Samsung’s commitment to nurturing supplier relationships combined with technological advancements and sustainable practices allowed them to transform their procurement function into a strategic asset for the organization’s growth and success.

Case Study #3: IBM

IBM, one of the world’s largest technology companies, has also faced its fair share of procurement challenges. However, through strategic initiatives and innovative approaches, they have successfully turned their procurement around.

One key aspect that contributed to IBM’s success was their focus on supplier relationships. They realized that building strong partnerships with suppliers would not only improve efficiency but also drive innovation. By fostering collaboration and open communication with suppliers, IBM was able to enhance the quality of goods and services while reducing costs.

Another factor that played a crucial role in turning procurement around for IBM was their adoption of advanced analytics and data-driven decision-making processes. By utilizing predictive modeling and real-time data analysis, they were able to identify potential risks and opportunities in the supply chain proactively. This enabled them to make informed decisions regarding sourcing strategies and inventory management.

Moreover, IBM recognized the importance of sustainability in procurement practices. They implemented sustainability criteria when selecting suppliers, ensuring adherence to ethical standards and environmental regulations. This commitment not only enhanced their brand reputation but also resulted in significant cost savings through waste reduction initiatives.

Furthermore, embracing technology played a vital role in transforming procurement at IBM. They implemented an integrated digital platform that streamlined purchasing processes across various departments within the organization. The automation of routine tasks freed up time for employees to focus on more value-added activities such as strategic sourcing and supplier relationship management .

In addition to these efforts, continuous improvement was at the core of IBM’s approach towards procurement transformation. They regularly reviewed performance metrics, sought feedback from stakeholders, and identified areas for enhancement or optimization within their procurement operations.

Overall, IBM demonstrates how a combination of factors including strong supplier relationships, data-driven decision-making, sustainability considerations, technological advancements, and continuous improvement can successfully turn around procurements challenges . By adopting similar strategies tailored specifically to your organization’s needs and leveraging the power of collaboration between internal teams and external partners, your company can also achieve procurement success .

Case Study #4: Boeing

Boeing is a global leader in the aerospace industry, known for its innovative aircraft and cutting-edge technology. When it comes to procurement, Boeing has faced its fair share of challenges but has managed to turn things around successfully.

One of the key strategies that led to Boeing’s procurement success was their focus on supplier relationships. They recognized that strong partnerships with suppliers were crucial for timely delivery and high-quality products. By nurturing these relationships and fostering open communication, Boeing was able to streamline their procurement process and ensure smooth operations.

Additionally, Boeing embraced digital transformation in their procurement practices. They implemented advanced analytics tools and automation software to improve efficiency and reduce costs. This allowed them to make data-driven decisions regarding supplier selection, pricing negotiations, and risk management.

Furthermore, Boeing prioritized sustainability in their procurement strategy . They actively sought out suppliers who shared their commitment to environmental responsibility by reducing waste generation and carbon emissions throughout the supply chain.

Through strategic supplier relationships , embracing digital transformation, and prioritizing sustainability goals, Boeing successfully turned around its procurement processes. These case studies demonstrate that with the right approach and mindset shift towards more collaborative approaches with suppliers can lead organizations towards successful transformations in this critical area of business operations.

Case Study #5: Nestle

Nestle, the multinational food and beverage company, has undergone a remarkable transformation in its procurement practices. Facing challenges such as increasing costs and supply chain complexities, Nestle made strategic changes to turn their procurement department around.

One of the key initiatives undertaken by Nestle was to implement a centralized procurement strategy. By consolidating their purchasing activities across different business units and regions, they were able to leverage their buying power and negotiate better deals with suppliers. This not only resulted in significant cost savings but also improved efficiency in the procurement process.

In addition to centralization, Nestle also focused on supplier relationship management . They established long-term partnerships with key suppliers, which enabled them to drive innovation and ensure consistent quality standards. Furthermore, they implemented stringent ethical sourcing policies to promote sustainability throughout their supply chain.

Another important aspect of Nestle’s success story is their investment in technology. They adopted advanced analytics tools that provided real-time insights into market trends, supplier performance, and risk assessment. This allowed them to make informed decisions quickly and proactively mitigate potential disruptions.

Furthermore, Nestle prioritized talent development within the procurement function. They invested in training programs for employees to enhance their skills in negotiation tactics, contract management , and risk mitigation strategies.

Overall,Nestlé’s commitment towards transforming its procurement practices has yielded impressive results.

They have successfully turned around their procurement department by implementing strategies such as centralization,supplier relationship management,and technology adoption.

This case study serves as an inspiration for other organizations lookingto improve their own procuement processes

Turning Procurement Around in Your Organization

Procurement plays a crucial role in the success of any organization. But what happens when procurement becomes a hindrance rather than an asset? It’s time to turn things around and optimize your procurement processes for better efficiency and cost savings. Here are some effective strategies that can help you transform procurement within your organization.

First and foremost, it’s important to have clear goals and objectives for your procurement team. Define what success looks like in terms of cost reduction, supplier relationships, and overall value creation. This will provide direction and motivation for your team to work towards these goals.

Next, focus on streamlining your procurement processes. Identify any bottlenecks or inefficiencies in the current workflow and find ways to eliminate them. Implementing automation tools or adopting digital platforms can greatly improve efficiency, reduce manual errors, and provide real-time insights into your procurement activities.

Building strong relationships with suppliers is another key aspect of turning procurement around. Cultivate partnerships based on trust, transparency, and mutual benefit. Regular communication with suppliers can lead to better negotiation outcomes, improved delivery times, and access to innovative solutions.

Leveraging data analytics is also essential in optimizing procurement practices . By analyzing historical purchasing data, you can identify patterns, trends, and potential areas for cost savings. Data-driven decision-making enables more informed choices when selecting suppliers or negotiating contracts.

Investing in employee training is vital as well. Equip your team with the necessary skills and knowledge to excel in their roles. Stay updated on industry trends through continuous learning initiatives such as workshops or conferences.

Lastly,is identifying opportunities for innovation within your procurement function .

Innovation does not only apply to products but also extendsto processesand methodologies.

Explore new sourcing strategies,such as strategic alliancesor collaborative partnerships,to drive efficiencies.

Without constant adaptation,you risk falling behind competitors who embrace change

In conclusion,taking proactive steps towards turning around procuremtninvolves setting clear objectives,strea

Conclusion:

These case studies highlight the immense potential for turning procurement around and achieving success in organizations. Companies like Ford, Samsung, IBM, Boeing, and Nestle have proven that with the right strategies and mindset, procurement can be transformed into a powerful lever for growth and competitive advantage.

The common threads among these success stories are clear: a commitment to innovation, strategic partnerships with suppliers, data-driven decision-making processes, effective risk management practices, and a focus on sustainability. By implementing these strategies and learnings from the case studies discussed here, organizations can set themselves on a path towards procurement excellence.

However, it is important to remember that there is no one-size-fits-all approach when it comes to turning procurement around. Each organization may have unique challenges and opportunities that require tailored solutions. It’s crucial to assess your own organization’s needs and capabilities before embarking on any transformation journey.

By embracing change, fostering collaboration between stakeholders both within the organization and externally with suppliers or partners – businesses of all sizes can unlock the full potential of their procurement function. Turning procurement around is not an easy task but with determination perseverance – it is possible!

So why wait? Start exploring new strategies today! Turn your procurement department into a catalyst for growth and success in your organization!

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Presenting procurement presentation slides. This deck covers all the major areas of procurement process. It highlights all the important aspects of the topic. This complete presentation comprises of amazing visuals, icons, graphs, and templates. Our designers have crafted this presentation with a thorough research. These slides are easily customizable. You can add or delete the content as per your requirement. Compatible with all screen types and monitors. Supports Google Slides. Premium Customer Support available. You can get access to this readymade professionally designed procurement presentation with just one click. Download it now.

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Sourcing And Procurement Assessment Process Importance Business

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Procurement Savings Continuous Improvement Performance Investment Cost Reduction

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Steps Of Strategic Procurement Process Powerpoint Presentation Slides

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1 4 case studies of ppp procurements

1.4: CASE STUDIES OF PPP PROCUREMENTS

Dec 22, 2011

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1.4: CASE STUDIES OF PPP PROCUREMENTS. Ned White Zanzibar, August, 2015. Session Overview. Case Study: SADC Headquarters Building PPP, Gaborone, Botswana Case Study: Jordan ’ s As-Samra Wastewater Treatment Plant PPP Procurement

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1.4: CASE STUDIES OF PPP PROCUREMENTS Ned White Zanzibar, August, 2015

Session Overview • Case Study: SADC Headquarters Building PPP, Gaborone, Botswana • Case Study: Jordan’s As-Samra Wastewater Treatment Plant PPP Procurement • Case Study: Kosovo’s International Airport Concession Procurement

Design, Construction & Maintenance of SADC’s New Headquarters Building, Gaborone • SADC founded in 1982, first as a “Conference”. 1997 as a more permanent “Community” • Need for a long-term headquarters facility : "We expect to improve our service delivery since all directorates and units of the Secretariat will now be under one roof, thereby providing improved coordination of our day-to-day activities," • 2002: Government of Botswana offered land for the project; a plot in the Central Business District of Gaborone under a 99-year lease.

PPP Tendering • 2004: A “Double Troika Committee of Finance Ministers” is established to approve the technical solution and the procurement of the new facility. Committee appoints an Experts Committee to support it and the SADC Secretariat • 2005: Experts Committee hires PriceWaterhouseCoopers as PPP Transaction Advisor, plus a law firm. • 2007: Through competitive tender, PPP Contract Awarded to Bongwe Investments, a Botswanan developer to design finance, construct, and maintain the new building

Memorandum of Understanding Amongst the Member States of the Southern African Development Community on the New Headquarters of SADC, Aug. 17, 2007 • “Whereas the SADC Summit of Heads of State or Government has decided to procure the design, financing, and construction of the new headquarters accommodation for SADC in Gaborone.” • “SADC Member States thus mandate the Govt. of Botswana to underwrite the financial obligations to be incurred by SADC under the PPP Agreement in accordance with the provisions of the PPP Agreement” • “SADC Member States acknowledge that the Project has undergone a competitive procurement process, and that the final mechanism for underwriting SADC’s financial obligations is as set out in the PPP Agreement.”

SADC Member States MoU Project Financing: Govt of Botswana PPP Contract Botswana Insurance Fund Management (Bifm) Land-Lease (99 yrs.) BONGWE INVESTMENTS (SPV) Barclays Bank Infrastructure Finance Co (INCA) Stocks & Stocks Botswana (Gen. Dev.) Outsourcing Botswana (Facilities Management)

SADC HQ PPP Investment • Estimated Capital Investment: $30 million • Construction Period: 19 months • PPP Contract Term: 15 years • Opening Ceremony: November 10, 2010

SADC HQ Building

Technical Scope of PPP • Structural: Single level basement parking will be provided and the offices and related facilities accommodation will be situated at and above ground level up to seventh floor. • The building structure will be mainly of reinforced concrete, with a structural steel roof on the low-rise component.  A sloped structural steel glazed facade will be provided over the entrance atrium and port cochere.  This roof will slope towards the rear to enable rain water to be drained away from the main entrance.  A flat concrete roof will be provided over the high-rise component. • Civil: The scope of service covers the design and specification of all civil engineering aspects of the Works as well as the interpretation of the contents of the geotechnical report.  The following sub-disciplines are included: Bulk earthworks, Domestic water supply, Fire water supply, Sewage reticulation,  Parking and stormwater, Rainwater discharge

Other Accommodation PPPs in Botswana • 2008: “Plot 21 PPP” for GoB’s Office of the Ombudsman & Land Tribunal Office • P 54 million ($ 6.1 Million USD) • Also awarded to Stocks & Stocks Botswana, BifM, & Outsourcing Botswana • 10-year PPP contract (2007-2008) • Construction commenced on February 21, 2007. • June 20, 2008, completed. Delivered within budget and on time.

AMMAN, JORDAN Irbed Der’a Jerash Mafraq Salt Zarqa AMMAN Jafa AMMAN Madaba Qatraneh Karak Abiad Hassa Tafilah Naqqab Ma’an El-Shidiya Batn El-Ghoul Aqaba Mudawara

Amman’s Wastewater Sector • Since 1985 the As Samra Waste Stabilization Ponds had been sole wastewater treatment facility for Amman region. • Design capacity: 68,000 m3/day • Ave. Inflow (1998): 170,000 m3/day • Untreated sewage had contaminated several sources of drinking water (King Talal Reservoir) and produced offensive odors for nearby residents • Jordan’s Second Wastewater Masterplan for 2000-2025 called for reducing the amount of potable water that goes to irrigation (60%) by providing purified effluent for restricted agriculture purposes (trees and feed pastures).

Feasibility Study Results: • Location: As Samra Wastewater Stabilization Ponds • Build-Operate-Transfer (BOT) Project Structure • 25-year concession term • $169 million investment (initial estimate) • Capacity of New Wastewater Treatment Plant: • 2 million population of Amman • Average wastewater flow: 267,000 m3/day • Maximum wastewater flow: 530,000 m3/day • Plant will treat 80% of the country of Jordan’s wastewater

Feasibility Study Results: • If tariffs were increased to full cost-recovery levels (to meet the payments for the new WWTP), they would be unaffordable. • The Government of Jordan cannot afford to provide the public “off-taker” (the Water Authority of Jordan) with the subsidies needed to cover the difference between its current collections and costs of a new WWTP BOT. • So, what do you do?…

PPP Structure & Credit Enhancements • Tariff Reform: Government of Jordan raised water & wastewater tariffs on end-users during project preparation to improve cost-recovery: • 0.3 JoD/m3 for first 30 m3/month (=$0.45/m3) • 0.5 JoD/m3 for greater than 30 m3/month (=$0.70/m3) • USAID grant-funded $78 million to Min. of Water & Irrigation (MWI) to subsidize the construction costs of the project in order to ensure that end-users tariffs would be affordable to Jordanians. • Condition of USAID Grant: At least 50% of the equipment and commodities should come from U.S. firms… • Swedish International Development Agency (SIDA) grants $5 million to pay for BOT transaction advisors

PPP Procurement • Appointment of experienced international PPP Transaction Advisors provided great confidence to international bidders • One single team of advisors throughout project preparation and into operation (SIDA grant): • SWECO (Sweden) Technical & Prime Contractor • Mannheimer Swartling (Sweden) Legal & Subcontractor • SEK Advisory Services (Sweden) Financial & Subcontractor • Procurement was based upon meeting specific effluent quality standards (outputs) NOT on project design or technology (inputs) • Price: Two-part tariff with fixed and variable components • “Spending time to make the bid documents high quality, greatly improves the bids you receive – the number of bids, the quality of bids, and their clarity. You must be very, very clear to bidders on exactly HOW their bids will be evaluated.”

BOT Procurement Timeline • Sept. 1998: MWI & Advisors prepare project • Feb. 2000: Pre-Qualification packages (RFQs) sold for 1,000 JoD ($1,600) each to 34 firms • 8 consortia of firms submit Qualification Statements • 5 consortia were Qualified to Bid • March, 2001: 3 consortia submit bids (Single Stage-2 Envelopes) • Ondeo (France), Morganti (Construction), USA • CH2M Hill (USA) • Vivendi (France) • January, 2002: Announcement of preferred Bidder = Ondeo • July, 2002: BOT Project Agreement signed • December, 2003: BOT Project Financing agreements signed • 3 year construction period. Operational 2007

As-Samra Wastewater Treatment Facility

BOT Project Financing Sources

As Samra Wastewater PPP Lessons Learned • Without a private operator to ensure sustainability, the Capital Grant from USAID would not have been given. • Without the USAID grant, the project would not have been affordable to Jordanians. • Raising water & wastewater tariffs during project preparation helped make project sustainable • International Transaction Advisors were instrumental to the success of the project • Competitive procurement was based upon lowest price per cubic meter of influent, NOT upon plant design, etc. (OUTPUTS not inputs) • Even with PPP Transaction Advisors, projects of this size take a long time to prepare and complete. • Similar future roles for grants from Millennium Challenge Corp (MCC) & Global Partnership for Output Based Aid (GPOBA)

Kosovo’s PPP Framework & Program • Kosovo’s Population: 1.8 million • Declared Independence from Serbia in 1999 • Av. Annual GDP per capita: $3,059 • Suffers from shortages of infrastructure across many different sectors in order to sustain a viable national economy: • Roadway infrastructure • Electricity generation • Municipal services (waste management & Parking) • Water supply & wastewater treatment • Limited airport & air traffic capacity

Kosovo Background Information: • 1999-2003: Serbia’s former military airport at Pristina damaged & closed to commercial aviation. Most goods & supplies enter the country by land from Macedonia or Albania. • 2004: Govt of Kosovo adopts the priority of expanding Pristina’s old military airport into the Nation’s international commercial airport. • 2005-2006: Govt of Kosovo looks at expanding the airport through a Concession structure, but Kosovo lacks the legal and institutional framework for PPPs, including concessions.

Kosovo’s PPP Framework: • Kosovo’s PPP Policy Directive, July, 2008. Signed by the Prime Minister, this Directive provided the Government of Kosovo clear support for PPPs in order to: • Increase needed investment into infrastructure and public services; • Create better value for money; • Follow international best practices in implementing PPPs, and • Ensure fairness, transparency, and competition. • Kosovo’s Law on PPPs and Concessions in Infrastructure and the Procedures for their Award, July, 2009 The law’s seven Parts define PPPs and the required roles and responsibilities of the key parties: • General Provisions of the PPP Law • PPPs and Concessions • Institutional Coordination and Responsibilities • Identification of Potential Projects and Procedures for their Award • The PPP Agreement • PPP Procurement Review • Final Provisions of the PPP Law

Pristina International Airport: • Located 16 kms from Capital City of Pristina • 2008: • 1.2 million passengers and14,000 aircraft operations per year • Annual air traffic growth of 11.4% • Serviced by 35 different air companies reaching 30 different destinations • Owned & operated by a publicly-owned enterprise “Pristina International Airport, Joint Stock Company” • 2008 Revenue of 21.7 million Euros earns a surplus. • 89% of Revenues from aeronautical fees • 11% from commercial activities • GoK’s Goal is to expand and improve PIA into a modern international airport, capable of meeting Kosovo’s air traffic and airport infrastructure needs, while sustaining itself financially • June, 2009: GoK officially launched PPP Procurement for a Concession for the Pristina International Airport.

Pristina Airport • Built in 1965 as a military airport • Commercial flights began in 1990’s

Airport Concession Structure • Term: 20-year Concession of existing assets plus construction & operation of improvements (Design-Build-Finance-Operate-Transfer “DBFOT”) • Required Minimum Investments by the Private Concessionaire: • Construct new 25,000 m2 Landmark Terminal Building • Construct new air traffic control tower • Relocation of air traffic control & navigation equipment • Widening of airport taxiways to accommodate larger E class aircraft • Construct new apron with 9 Boeing 737 parking spaces • Construct new 1,750 car parking facility • Construct new taxi & bus stand area • Construct new access road to the Airport • Provide new water treatment plant for airport • Provide other needed airport operating equipment • Required Performance Standards: Able to meet Int’l Air Travel Association (IATA) Level C Standards within 2 years of PPP contract signing • Contract Scope: Operate and provide all airport services, except air navigation services

Airport Concession Structure: • Concession Fee: Private concessionaire will pay a percentage of its revenues to the Government of Kosovo. Final revenue-sharing percentage to be determined through competitive tender • Rates & Charges: PIA’s current schedule of rates and charges for aviation services will be capped during the term of the contract • Employment Terms: Private concessionaire will honor existing employment contracts for a pre-determined period of time • Ownership: Moveable and immoveable assets are leased to the Private concessionaire. Ownership of all assets remains with Government • Procurement: Selection of private concessionaire will be based upon international competitive tender

PPP Procurement • PPP Transaction Advisors funded by USAID, provided to Kosovo’s new PPP Unit in the Ministry of Finance Initial Plan for Airport PPP Procurement: • July – August, 2009: Request for Qualifications (RFQ) Issued • September, 2009: Submission of Qualifications by interested private consortia (teams of firms) • October, 2009: Issue Draft Bidding Documents to Qualified Bidders (consortia/teams) • October, 2009: Pre-Bid Conference • December, 2009: Deadline for Proposals & Contract Award

Airport PPP Procurement • Pre-Qualification Process took longer than planned to complete. • August 10, 2009: Request for Qualifications (RFQ) Document Released. • October 16, 2009: Qualifications Due • November 13, 2009. 3 consortia short-listed to bid: • Bouyges Batiment/Egis/ Eurokoha - PAIC Consortium; • Fraport IC ICTAS Havalimani Isletme A.S and • Limak/Aeroport de Lyon Consortium.

Airport PPP Procurement: • January 6, 2010: Draft PPP Tender Document released • January 27, 2010: Bidders Conference in Pristina • February & March, 2010: Over 700 specific questions asked by bidders on the Tender Documents regarding: • Terms & Conditions of the Draft PPP Contract • How bids will be evaluated • Technical & Financial performance standards • March 15, 2010: Final, updated, non-negotiable PPP contract released to bidders • April 28, 2010: Technical & Financial bids due • May 14, 2010: Financial bids opened in public & winning bidder announced

PPP Results: • Winning bidder: French-Turkish consortium of: • Aeroport de Lyon (France) • Limak Holdings (Turkey) • Protest by unsuccessful PIAC bidder rejected by Govt of Kosovo Procurement Review Committee in June, 2010 • PPP Contract signed in August, 2011 • 100 million Euro of new investment by private concessionaire including: • 85 million Euro project-backed loan from Vakifbank (a Turkish commercial bank, part-owned by the Government of Turkey) • 15 million Euros in equity from Aeroport de Lyon & Limak Holdings • Financial Closure reached in January, 2011 • Official “hand-over” ceremony and private operations began April, 2011

PPP Procurement Results • Revenue-sharing from private concessionaire paid to Government of Kosovo = 39.43% • Projected total of 450 million Euros of revenue will be paid to the Govt. of Kosovo by the concessionaire over the 20-year life of the PPP contract • New terminal & improvements expected to be completed at the end of 2012. • Limited-Recourse Project Finance: Final version of the contract transferred significant risks back onto the Govt. of Kosovo to guarantee the 85 million Euro loan from Turkey’s VakifBank • Government’s PPP Contract Monitoring Unit is the PPP Unit itself, NOT the Ministry of Transport or the old PIA Joint-Stock Company.

Construction of New Airport Terminal

Airport Construction Plans:

PPP Lessons Learned • PPP procurements often take longer to complete than planned, especially for large, complex projects like airports. • PPP transaction advisors are critical to the successful preparation and completion of PPP procurements • PPP procurements usually produce MANY questions from bidders and investors about contract clauses, evaluation procedures, and performance standards • Kosovo is designing and managing its new PPP framework (procedures & institutions) based primarily on this Airport Concession Experience

Discussion Questions: • PPP Tenders can take a long time to prepare and complete. What the Biggest challenges to efficient completion of Housing Sector PPP transactions in Tanzania? • When PPP Transaction Advisors are used in Tanzania, what are the most important techniques to overseeing and managing them effectively?

Session Overview Goals for this Module 2 Workshop Overview of the 5-Module PPP Capacity Building Program Review of Module 1 (June 10-12) Overview of Module 2 Workshop Curriculum & Schedule Introductions of Workshop Participants

Goals for this Workshop Understand and apply the techniques for conducting identifying & selecting appropriate candidate projects for PPPs. Be able to draft and to critique PPP Concept Papers & Pre-Feasibility Studies Be able to oversee PPP Feasibility Study Consultants and review & critique PPP Feasibility Studies.

Phases of Tanzania’s PPP Project Management Cycle: Phase 1: PPP Identification, Selection, Feasibility Analysis, & Preparation of PPP Projects Phase 2: PPP Tendering & the Private Partner Selection Process Phase 3: Post Award PPP Project and Contract Management

Road-Map of Tanzania’s PPP Project Management Cycle:

TANZANIA: Integrated, Cumulative 5-Module PPP Capacity Building Program 3 – Intermediate: Understanding PPP Financial Analysis & Models 4 – Intermediate: Implementing the PPP Tender Process 2 – Intermediate: PPP Project Selection & Feasibility Analysis 5 – Intermediate: PPP Contract Management & Performance Monitoring 1 – Introductory: Managing the PPP Project Cycle 43

Module 2-Workshop Program & Schedule: • Day 1 • 1.1: Workshop Overview & Introductions • 1.2: PPP Project Identification, Screening & Selection Techniques • 1.3: Case Studies of PPP Project Selection & Identification • 1.4: Group Exercise on PPP Identification & Selection • 1.5: Preparing the PPP Project Identification Concept Paper • Day 2: • 2.1: Review of Day #1 • 2.2: Group Exercise – Reviewing a PPP Concept Paper – Part 1 • 2.3: Group Exercise – Reviewing a PPP Concept Paper – Part 2 • 2.4: Managing & Completing PPP Feasibility Studies • 2.5: Case Studies of Managing & Completing PPP Feasibility Studies • Day 3: • 3.1: Review of Day #2 • 3.2: Group Exercise of PPP Feasibility Study Management – Part 1 • 3.3: Group Exercise of PPP Feasibility Study Management – Part 2 • 3.4: Workshop Review & Summary • 3.5: Workshop Test, Participant Evaluations & Workshop Conclusion

Workshop Participant Introductions • Your Name (how you would like to be called) • Your organization, title, and professional responsibilities • Your specific goals for attending this PPP Capacity Building Workshop Program. For example: • A specific PPP project you are now working on; • Specific PPP analysis techniques or skills you are most interested in learning (financial, technical, legal, stakeholder management, etc.); • Specific PPP project management issues you are most interested in (ie PPP Feasibility Analysis, PPP Procurement, PPP Contract Management & Performance Monitoring , etc.) • One interesting personal detail about yourself (special hobbies or interests, unique talents, favorite sports teams, etc.)

Contact Information Ned White International PPP Investment Specialist USA Mobile: +1-703-472-3965 [email protected]

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How to Solve a Supply Chain Case Study Interview

  • Last Updated January, 2022

Former Accenture

People can be nervous about approaching a supply chain case study interview.

Everyone has some level of experience with marketing and sales because they see these functions in stores and advertisements every day.

The supply chain that gets the product on a store shelf (whether it’s a physical one or digital) can be more opaque.

Supply chain management is the optimization of the process of designing and creating a good or service and getting it to the customer in the most efficient way possible.

Breaking the supply chain down into its component steps will allow you to look at essential parts of the process and uncover which steps may have problems that need to be addressed to better meet customer needs.

In this article, we’ll discuss:

  • The types of business problems that fall under supply chain management,
  • Why supply chain matters,
  • Key factors to consider in a supply chain case,
  • A supply chain case example, and
  • Our 7 tips on answering a supply chain case interview question.

Let’s get started!

What Types of Business Problems Fall into Supply Chain Management?

Supply chain management includes:

  • Product development, 
  • Sourcing parts and materials, 
  • Production, 
  • Logistics, and
  • Information systems that support this process.

Each consulting firm breaks down the group of consultants who work on supply chain problems differently. Some firms put the entire process under supply chain. 

In others, “production” problems are managed by an operations practice or service line. The supply chain practice is responsible for issues like:

  • How does a company get the necessary components that go into making its product in a cost-effective and timely fashion?
  • And how does the company deliver that product to the end-customer efficiently and at the required service level?

For example, before a company can manufacture a bike, it needs tires, steel, or aluminum for the frame, the bike chain, etc. To get the finished bike to market, they need transportation to retail stores or a chain’s distribution warehouse. 

For the purpose of this article, we’ll look at the broader definition of supply chain, the entire process from getting components parts, to manufacturing the product and delivering finished goods as cheaply and efficiently as possible while meeting or exceeding service level expectations.

Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.

Why Does the Movement of Goods To & From a Factory Matter So Much?

Moving goods to and from a factory might not seem to be the most exciting thing in the world but it’s fundamental to business success. If you can’t get your innovative new product to market so your customers can buy it, it can’t add value to your bottom line. 

From a financial perspective, there are both inbound and outbound considerations. 

Inbound considerations include:

  • Transportation costs from supplier to factory/warehouse
  • Warehousing cost 
  • Carrying cost of inventory

Outbound considerations include:

  • Transportation costs from factory to customer or store

Let’s look at these in more detail.

Transportation Cost

Transportation costs include both receiving goods from suppliers and distributing them to the customer. There are several factors to be considered when calculating transportation costs, and they may have to be weighed against other factors.

For example, is it more beneficial to use a cheaper supplier that has higher inbound transportation costs? Is it better to use a more expensive carrier service that results in a lower rate of damaged goods or quicker transit time?

Warehousing Cost

The cost of storing inventory, whether component parts or finished products, needs to be considered in effective supply chain management. Warehousing costs can be significant and can be optimized in a number of ways:

  • Only renting the storage space you need and using it efficiently.
  • Optimizing product packaging to reduce the storage space required.
  • Researching less expensive potential warehousing locations.
  • Using a multi-client facility where several businesses share the cost (if not a lot of space is required.)

It’s worth bearing in mind that, like many things in supply chain management, there may be tradeoffs. Cheaper warehousing that’s poorly connected to a company’s distribution network could end up costing you more time and money than more expensive storage that’s well connected. It’s important to optimize total supply chain costs, not each individual cost in the supply chain.

Inventory Carrying Cost

In addition to storage costs, there are several other costs associated with holding inventory. These include:

  • Capital cost . Money that’s been invested in inventory cannot be used elsewhere.
  • Insurance . Storing inventory requires insurance to cover the risk of theft or damage.
  • Risk . Products may decrease in value or become obsolete during the time they’re stored.

Similarly, from a customer service level perspective, there are both inbound and outbound considerations.

  • Factory/production cell downtime due to lack of component parts. 
  • Missed sales due to stockout at retail stores.
  • Failure to meet customer service-level expectations.

In short, inventory levels are about managing supply vs. demand. If there is a problem with inbound supply, production will slow or cease. This is highly inefficient and reduces potential product profitability. 

For example, the blockage of the Suez Canal in early 2021 due to a container ship that ran aground was expected to delay shipment of $9.6 billion in goods a day on the 150+ vessels waiting to travel through the canal according to a BBC article. These delays are expected to cost companies substantial sums due to:

  • Lost sales as customers look to competitors to purchase out-of-stock goods,
  • Production downtime at manufacturers resulting from parts shortages,
  • Higher shipping costs on ships detoured to longer, more expensive sea routes to avoid the canal, and 
  • Higher shipping costs due to a worldwide shortage of shipping containers that was exacerbated by this accident.

Key Factors to Consider in a Supply Chain Case Study Interview

A supply chain process map.

When analyzing a supply chain case, the best place to start is by mapping out the steps parts go through as they come into the factory, go through the manufacturing and quality control processes, and then are finally shipped to the customer. A process map like the one above will help you identify key steps.

Imagine yourself walking the production floor following the process the parts and end-product go through. In a supply chain case with an actual client, you’ll do this.

An effective supply chain moves the various elements seamlessly in the most efficient manner, minimizing waste and maximizing profitability. The flow of information between supplier and buyer, production, and the market should also move freely. This means it can be used to improve supply chain decisions. For example, an increase in orders at Manufacturer A will be communicated to their supplier, Company B, so that they know that they expect a larger than normal parts order and are prepared to fulfill it.

Imagine How Raw Materials Arrive at a Factory and Move Through It

  • What steps are required to get parts into inventory?
  • Where are they stored?
  • How are they moved around the factory?
  • How are they changed to outputs – single step or multiple?
  • Is there an assembly step? A quality control step?
  • How are they packaged and stored?
  • Where and how are they prepared and loaded for delivery to market?

Tip! Look for steps in the process where inventory is piling up. This may be because parts supply or production is unbalanced, reducing efficiency. Find ways to improve these bottlenecks.

Tip! Look for areas where there are significant problems with quality control. Parts or products that need to be sent back to suppliers or go through production rework are opportunities to improve efficiency and quality and, by doing so, save money.

After you have a clear understanding of the company’s supply chain, there are 4 factors you’ll want to dive deeper into to find opportunities to improve efficiency:

  • Operational considerations,
  • Financial considerations,
  • Service levels, and 
  • Matching supply and demand.

Operational Considerations

The best supply chains are highly efficient, which means they have low to minimal waste and consistently operate at optimum levels. This means that labor capacity is well-matched to production requirements.

They are also reliable with robust supplier relationships and an effective transportation solution.

Questions to Ask about Operational Efficiency

  • Product development
  • How well do we understand customer needs and use that insight to develop next-generation products?
  • How efficient are we at designing new products to meet these customer needs?
  • Is there a good split of engineering resources allocated to incremental product improvements versus next-generation product design?
  • Do we regularly review contracts for cost-savings opportunities (both for direct spend on components that go into our end-products and indirect spend on things such as travel and office supplies)?
  • Do we optimize total cost of ownership rather than individual component costs?
  • Is the production process optimized or does work-in-process accumulate behind bottlenecked resources (equipment or employees)?
  • Does the factory experience production shut-downs due to a lack of raw materials?
  • Does the factory experience unexpected equipment downtime?
  • Are employees cross-trained to minimize rework?
  • How efficient is the inbound transportation network? Are raw materials received on a just-in-time basis? How often are there stock-outs?
  • How efficient is the outbound transportation network? Are end products received by customers on time? 
  • Are there product defects or quality issues caused by transport?
  • Information systems that support this process
  • Do information systems support the exchange of data up and down the supply chain to optimize decision-making?

Financial Considerations

There are both fixed and variable costs associated with getting a product to market that should be considered.

Fixed Production Costs

Fixed costs are costs that are independent of production volume (at least over the short term) — for example, factory leasing costs.

Let’s assume a factory can produce a maximum of 10,000 units of a product a year. To lease the factory is the same price whether you produce 1 unit or 10,000 units a year. 

Fixed costs can depend on production volume only when it exceeds a threshold volume.

For example, if sales increase and the business needed to produce 15,000 units a year, the company would need to lease another factory to deal with the increased production. In this case, volume does affect a fixed cost.

Fixed costs do directly influence the cost per unit, however. The higher the utilization of the fixed production volume, the lower the cost per unit. 

For example, if the factory mentioned above costs $10,000 to lease and the factory is producing at its full capacity of 10,000 units, then the fixed cost/unit of output is $1. If the factory is only running at 50% capacity, the fixed costs/unit of output would double to $2.

Variable Production Costs

Variable costs change in proportion to production volume. For every additional unit produced, an additional $x of variable cost is incurred. Examples of variable cost items include raw materials and hourly labor costs.

There are times when rebalancing fixed and variable costs can be an opportunity for savings. For example, is it beneficial to invest in machinery or automation (fixed cost) if it reduces high labor costs? Be sure to look for opportunities like this as well as optimizing fixed and variable costs on their own.

Questions To Ask About Financial Optimization

  • How do increases and decreases in production impact fixed and variable costs?
  • Are there variable costs that fixed costs could replace?  (Example: new machinery that could reduce labor costs as well as total costs of production?)
  • Are there fixed costs that could be reduced through outsourcing? (Example: costs of leasing and managing a warehouse that could be reduced by outsourcing?)
  • Where are the biggest opportunities for financial savings?
  • How could reducing or increasing costs affect other considerations such as operational efficiency?

Service Levels

In supply chain management, the term service level has a specific meaning. It relates to how well inventory levels fulfill customer orders. A good service level is one that can fulfill customer orders without incurring a delay.

This is important because customer loyalty may decrease if products are consistently out of stock.

Questions To Ask About Service Levels

  • What are the clients’ service level expectations?
  • How often are customer orders fulfilled successfully?
  • How would changing service levels affect buyer behavior or customer retention?
  • How would changing service levels increase or decrease costs?

Supply and Demand

Effective supply chain management is about ensuring demand for the product is equaled by supply, at the lowest cost to the business.

If demand is higher than supply, customers could turn to a competitor.

If supply is higher than demand, inventory costs can reduce profit margins. Storing inventory also increases business risk as the product may decrease in value or become obsolete as it waits to reach the market.

Questions To Ask About Supply And Demand

  • What factors influence supply?
  • What factors influence demand?
  • How good is the organization at forecasting demand?
  • How flexible is the organization at changing output (e.g., are workers cross-trained for different production cells?)
  • How well are supply and demand currently balanced?
  • If they are imbalanced, what factors are contributing to this and how can those issues be fixed?

Supply Chain Case Study Interview – A Sample Question

Problem: Intel is the world’s largest manufacturer of computer chips. In 2008, Intel launched its low-cost “Atom” chip . The supply chain costs of Intel’s chips were about $5.50 a chip, which were acceptable for chips that sold for $100 each. For the Atom chips, priced at $20, these costs were too high to generate a profit.

What factors should Intel consider in order to reduce its supply chain costs, and what actions would you recommend as a priority?

Mapping the Supply Chain

Mapping out the supply chain process for Intel’s Atom chip identified several steps that had already been optimized including:

  • Raw material costs, 
  • Packaging costs, and
  • Duty payments.

It also identified that customers required a 2-week service level for receiving orders after a purchase order was submitted. 

However, the order cycle for the Atom chip was 9 weeks. Order-cycle time is the time between when a customer order is received and when the goods are shipped. High levels of inventory were required to ensure that customer service levels could be met despite the long production cycle time.

Because of this, production time/inventory was identified as the key step that had opportunities for improvement.

Identifying Opportunities to Reduce Production Time and Inventory

The process for reducing inventory required reducing the order cycle time to meet the customer’s 2-week required service level. Getting to a 2-week cycle time from a 9-week cycle time was a considerable challenge. To meet this challenge, opportunities to improve order cycle time were addressed throughout the supply chain process. 

As described above, for a supply chain case, there are 4 main factors to consider:

  • Service levels, and
  • Supply and demand.

In drilling down on this case, the following opportunities were identified:

  • Financial: Intel moved to a vendor-managed inventory model where possible to save inventory carrying costs. Vendor-managed inventory is the process of having a parts manufacturer take responsibility for holding the required amount of inventory at the customer location.  
  • Operational: The team was able to identify multiple production process improvements to reduce order cycle time, such as cutting the chip assembly test from 5 days to 2 days.
  • Service levels : As mentioned, the 2-week required service level was not flexible, providing no opportunities in this area.
  • Balancing supply and demand: Intel introduced a formal sales and operation planning process to provide better demand forecasts and time production to better meet demand.

Our 7 Tips on Answering a Supply Chain Case Interview Question

Tip 1: walk through the supply chain process.

Start by mapping out the step-by-step supply chain process.

Understanding how materials arrive from suppliers, the steps to turn them into outputs, and what’s needed to get them to market is an important first step. Once you’ve done this, look for bottlenecks or inefficiencies in the system.

Tip 2: Clarify Your Understanding of the Case 

At the start of any case study, it’s important to make sure you understand the question. This includes any information you’ve received about the case and also what you think you need to do to solve it.

A simple way to do this is to repeat back to the interviewer what you know about the case and what you believe the task to be. This gives them an early opportunity to guide your thinking if you look to be going off track.

Tip 3: Ask Questions

If you don’t understand anything, ask! Even if you feel you should know something, there’s no point wasting time worrying about it. Just ask the question and move on.

Similarly, if there are gaps in the data provided, or you need more information in order to form a hypothesis or conclusion, ask your interviewer for more detail. They may provide further information that helps you choose an approach or strengthens your analysis.

Tip 4: Take Time to Structure your Thinking

Don’t be afraid to take your time when structuring your approach to the case. 

Moments of silence can feel endless in an interview situation, but it’s better to use some extra thinking time and respond clearly and logically than answer immediately in a rushed or haphazard manner.

If you need more time to think, it’s perfectly ok to signpost that to your interviewer by asking for a little more time to organize your thoughts.

Tip 5: Use A Framework

Frameworks are popular with both candidates and interviewers alike as they bring structure to your analysis. 

Case interviews can be daunting, and anxiety can make it tricky to think things through logically. Using a framework provides an anchor to organize your thoughts around and makes it less likely you’ll leave anything out.

In supply chain cases, the supply chain process itself can often be used as your framework.

Tip 6: Share Your Analysis

Speaking of analysis, don’t be afraid to share your thoughts aloud. A case interview should be more of a conversation than an interrogation!

Remember your math teacher always telling you to show your work? The same is true in case interviews.

Explaining your thought process helps the interviewer see how you process and make connections between pieces of information. They may also point out small mistakes in your arithmetic so that they don’t mess up your conclusion.

Tip 7: Provide a Recommendation

At the end of the interview, briefly summarize the information you’ve uncovered about the case and how it’s influenced your thinking. Then clearly state your recommendation for the client’s next steps.

Make sure you also share any other important details, such as any risks associated with your recommendation and how they might be overcome.

In this article, we’ve covered:

  • Which business problems supply chain management covers,
  • The reasons supply chain management is important,
  • The essential considerations of a supply chain case,
  • An example of a supply chain case, and
  • Our top 7 tips for acing the supply chain case interview.

Still have questions?

If you have more questions about supply chain case study interview questions, leave them in the comments below. One of My Consulting Offer’s case coaches will answer them. Other people prepping for supply chain case interviews found the following pages helpful:

  • Our Complete Guide to Case Interview Prep ,
  • Case Interview Types , and
  • Case Interview Examples .

Help with Consulting Interview Prep

Thanks for turning to My Consulting Offer for advice on supply chain case study interview questions. My Consulting Offer has helped almost 85% of the people we’ve worked with to get a job in management consulting. We want you to be successful in your consulting interviews too. For example, here is how Tanya was able to get her offer from McKinsey.

4 thoughts on “How to Solve a Supply Chain Case Study Interview”

I need to do a power point for an interview. I have to do a Logistics Analyst Case Study answering questions regarding delivery data for the supply chain and I can’t seem to figure out how to go about answering the questions. I need some professional guidance to help me through the process. Thank you.

Supply chain cases are challenging.

If you’d like an overview of how to approach answering a consulting case interview, our Ultimate Guide to Case Interview Prep is your best source. If you’d like a one-on-one coach for case interviews, including learning how to case in as short as a week, you can apply here .

I would like some more information on supply chain cases – interview’s specifically but not only

Hey, Michael,

Here are a couple publically available cases that might help you: Steel Co. from the NYU Stern 2019 casebook. https://drive.google.com/drive/folders/1AImB14ysaUoYBNw-ArtoCtzZA5cADUhy S.A. Shipping from the McCombs Texas MBA Casebook 2017-2018.

Best of luck on your supply chain case prep!

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Elon Musk Dominates Space Launch. Rivals Are Calling Foul.

At a time when the U.S. government is concerned about its reliance on a mercurial billionaire for access to space, new competitors say Elon Musk’s SpaceX is using tactics intended to squash them.

Credit... By Associated Press

Supported by

Eric Lipton

By Eric Lipton

Eric Lipton, who has written extensively about the intersection of technology, the military and space, reported from Washington; Cape Canaveral, Fla.; and Brownsville, Texas.

  • May 28, 2024

Elon Musk aggressively elbowed his way into the space launch business over the past two decades, combining engineering genius and an entrepreneurial drive with a demand that the U.S. government stop favoring the big, slow-moving contractors that had long dominated the industry.

Today, it is Mr. Musk who is dominant. His company, SpaceX, is the primary provider of launch services to NASA and to the Pentagon. His rockets carry far more commercial satellites into orbit than anyone else’s, including those for his own Starlink communications network. He has set new standards for reaching space cheaply and reliably.

But in one striking way, the former outsider has come to resemble the entrenched contractors he once fought to topple: He is increasingly using his vast power and influence to try to keep emerging rivals at bay, his competitors say, even as his success is prompting qualms within the government about such heavy reliance on a mercurial billionaire.

The new generation of space entrepreneurs trying to emulate Mr. Musk is sufficiently concerned about what they see as his anticompetitive tactics that some of them are now willing to take him on publicly.

Tim Ellis started Relativity Space after being inspired by Mr. Musk’s pursuit of a rocket that could carry humans to Mars. Then he heard from other industry executives that individuals with ties to SpaceX were trying to block his efforts to raise money for his own Mars project.

Jim Cantrell worked with Mr. Musk at the founding of SpaceX in 2002. When he started to build his own launch company, Phantom Space, two potential customers told his sales team they could not sign deals because SpaceX inserts provisions in its contracts to discourage customers from using rivals.

Peter Beck, an aerospace engineer from New Zealand, met in 2019 with Mr. Musk to talk about Mr. Beck’s own launch company, called Rocket Lab. Several months later, SpaceX moved to start carrying small payloads at a discounted price that Mr. Beck and other industry executives said was intended to undercut their chances of success.

“I don’t think this is an accidental monopoly,” Mr. Beck said in an interview about SpaceX and Mr. Musk. “These are business decisions that are being made.”

None of these executives said they had taken legal action against SpaceX. And no one in the industry disputes that Mr. Musk and SpaceX deserve enormous credit for making spaceflight more affordable and almost routine.

But his tactics are generating a backlash within the industry. And they are adding to concerns in the government about relying so heavily for a critical technology on someone known as much for his divisive public statements, his increasingly outspoken political positions that are at odds with U.S. policy and his deep business ties to rivals like China as he is for his engineering prowess.

Mr. Musk endorsed an antisemitic theory late last year on his social media platform X. He has nurtured relationships with right-wing leaders around the world. And he has publicly stated that Russia will not lose its war against Ukraine, endorsing an argument that the United States should not have provided Kyiv with additional military assistance.

“Elon Musk’s rhetoric and behavior undermines his credibility and reliability on a global scale,” said Senator Jeanne Shaheen, Democrat of New Hampshire, who this spring questioned Pentagon officials about Mr. Musk. “Commercial services, including SpaceX, that do business with the U.S. government need to be thoroughly vetted to ensure that the U.S. military can depend on them in times of crisis.”

A close-up image of Elon Musk’s face with his hand on his mouth.

Last month, a bipartisan group of 36 House lawmakers sent a letter to Frank Kendall , the Air Force secretary, urging him to make sure that the Air Force pushes for “increased competition among launch providers.”

Representative Dale Strong, Republican of Alabama, whose office helped draft the letter, said he was concerned that a dominant Pentagon launch provider might squeeze out upstart rivals. “These smaller companies, they’re just trying to cut their teeth,” he said.

SpaceX did not respond to requests for comment. But when interviewed at a recent industry conference, one of SpaceX’s senior executives disputed any suggestion that the company was trying to force other new launch companies out of business.

“I don’t buy that, not at all,” Gary Henry, who works on national security contracts for SpaceX after earlier posts with Boeing and the Air Force, said in the interview. “I can see if you are on that end of it, it might feel that way. But people in those companies who know us personally know that is not the case.”

In a presentation to SpaceX employees in Texas this year, Mr. Musk did not directly address claims of anticompetitive behavior from rivals in the launch industry. But he noted that SpaceX had carried cargo to orbit, or agreed to do so in the future, for competitors in related businesses including Amazon , Telestat , OneWeb and Apple-backed Globalstar , all of which are rivals of SpaceX’s Starlink communications network.

“We’re actually on contract to launch Amazon’s Kuiper constellation,” Mr. Musk said, evoking a round of laughter from the gathered SpaceX employees. “And we treat everyone fairly.”

SpaceX’s defenders also point out that the launch business appears to be growing more competitive, not less.

Jeff Bezos’ Blue Origin is close to its first launch for its New Glenn rocket. Rocket Lab is building what it calls Neutron , and Relativity Space is working on its Terran R , among other new entrants. After years of delays, Boeing is soon expected to start launching NASA astronauts into space on its new Starliner spacecraft.

For now, though, the ability of the United States to reach orbit, particularly for its most vital classified military and spy satellites, remains largely dependent on Mr. Musk and his Falcon 9 rocket.

“Heaven forbid we have a mishap with a Falcon 9 launch,” said Col. Richard Kniseley, who helps run Space Force’s Commercial Space Office. “That means it is grounded, right? And that means we could be without launch. So that’s where my concern is.”

SpaceX has collectively been awarded $14.7 billion in federal launch prime contracts over the last decade, according to an analysis performed by The New York Times by the Center for Strategic and International Studies.

Value of federal contracts awarded to major space corporations

procurement case study ppt

Russia Space

Sierra Nevada

Blue Origin

Northrop Grumman

United Launch Alliance

procurement case study ppt

Last year alone, SpaceX secured $3.1 billion in federal prime contracts, according to the data, nearly as much as the combined amount the federal government committed for space transportation and related services from its nine competitors, from giants like Boeing and Northrop Grumman to startups like Blue Origin.

SpaceX is privately held, so it does not release revenue figures, but Payload, an industry research site, estimated that nearly 60 percent of SpaceX’s launch-related revenue last year came from the federal government.

This means that despite Mr. Musk’s early disdain for government subsidies granted to his rivals, including Lockheed and Boeing, SpaceX’s own rise has been bankrolled in large part by NASA and the Pentagon.

At the same time, SpaceX has increasingly adopted business tactics that Mr. Musk once condemned , including expanding its lobbying presence in Washington and hiring top Pentagon and NASA executives after they played key roles in awarding contracts to SpaceX.

SpaceX now employs William H. Gerstenmaier, who supervised the NASA commercial cargo program that hired SpaceX.

SpaceX also hired Terrence J. O’Shaughnessy, a former Air Force general who first moved to retain SpaceX to provide its Starlink satellite service to the military, and Kathy Lueders, who was the lead NASA contract official who picked SpaceX for a $ 2.9 billion contract for the spacecraft that will take NASA astronauts from lunar orbit to the surface of the moon for the first time in 50 years. (SpaceX did not respond when asked about these hires. No one has accused the former officials of favoritism.)

SpaceX has boosted its spending on lobbyists by 30 percent since 2020, reaching $2.9 million last year, federal records show. (That is still far less than the spending on lobbyists by giant military contractors like Lockheed and Boeing , or Amazon .)

Lori Garver, a former NASA official who pushed for NASA to hire private companies to take astronauts to and from the space station and has repeatedly praised SpaceX’s performance, said she too has been surprised by the company’s aggressiveness.

“I underestimated how it would play out over the long term and the dominant position they would get to,” she said. “And the lengths to which they would go, once in the dominant position, to fight to keep that dominance.”

Outsider No More

It was a foggy morning in February at the Cape Canaveral Space Force Station in Florida, as bursts of supercooled oxygen sprayed from the upper sections of the Falcon 9 rocket — a sure sign that yet another SpaceX rocket was about to blast off.

At the moment the launch window opened, the Falcon 9 lifted off , carrying 23 Starlink satellites to low Earth orbit — about 230 miles up in space. It marked the start of a burst of activity that demonstrates just how dominant SpaceX has become.

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Three days later, at an adjacent Kennedy Space Center launchpad, another SpaceX Falcon 9 lifted off , this one carrying four astronauts on a NASA-funded flight to the International Space Station.

Two more Falcon 9 launches followed , later that day and the next . One, launched from California, was stuffed with 53 spacecraft from companies that had shared a ride on SpaceX’s Transporter service, which allows companies to book a slot for their cargo online.

In South Texas, SpaceX then had its third test flight of Starship . It is the largest rocket ever created — big enough to carry three times as much cargo as NASA’s Space Shuttle was capable of lifting into orbit and at a price so low, it could completely upend the commercial launch market again.

Finally, by late March, SpaceX had launched its 30th cargo delivery toward the space station.

SpaceX’s 96 successful orbital launches during 2023 contrast with seven launches to orbit from the U.S. in total last year by all of SpaceX’s competitors, and were more than all launches from Russia and China combined. The majority of SpaceX launches last year were to put its own Starlink satellites into orbit, but even without Starlink, it has a dominant role.

The United Launch Alliance, a joint venture set up by Lockheed and Boeing, sent only three rockets to orbit last year.

Those figures are a striking shift from a decade ago, when SpaceX sued the Air Force asserting that it had illegally directed launch business to the Lockheed-Boeing joint venture, known as ULA.

“Boeing and Lockheed joined forces to convince the Air Force that the culprit was competition itself, and formed ULA to monopolize,” the company wrote in its 2014 bid protest. The lawsuit demanded that the Air Force award some of its military launches to SpaceX, which at that point still had not been certified by the Pentagon as reliable enough to carry high-value national security cargo.

Mr. Musk also slammed what he said was unnecessary federal funding that was going to these companies, suggesting that such subsidies were wasteful.

Now SpaceX is enjoying a steady flow of government money as its record of reliability and low costs fosters more federal contracts.

Even when major contractors like Boeing have attempted to compete with SpaceX, it has taken them longer to get their spacecraft built, and what they produce comes in at a much higher price. One example is the Starliner that Boeing is building under a $4.3 billion contract for NASA to deliver crews to the International Space Station.

Once Starliner is operational, it will cost NASA an estimated $90 million for each astronaut launched to orbit through 2030, compared to $55 million a seat on SpaceX, according to the agency’s inspector general .

Mr. Musk’s fierce competitive tactics were on display in 2014 , when he pushed the federal government in a lawsuit to enforce a plan to prohibit the Lockheed and Boeing joint venture from continuing to rely on a Russian-made engine for the Atlas V rocket it used to send military and spy satellites into orbit.

Congress and the Obama administration were already pushing the companies to find an American-made replacement. But banning the use of the Russian engine before a reliable alternative could be put in place would have left United Launch Alliance unable to meet the Pentagon’s launch needs — in turn creating an opening for SpaceX.

“We design and manufacture the rockets in California and Texas with key suppliers throughout the country,” Mr. Musk told a Senate committee in 2014.

Air Force officials worried even then that a ban on use of the Russian engines might mean replacing one monopoly with another.

“We have been concerned for some time that with the course that we are on, we may end up with one launch service provider,” Mr. Kendall, now the Air Force secretary, told the Senate in 2016, when he was serving as the service’s top acquisitions officer.

That prediction has to some extent come true.

Forced to phase out its use of the Russian engines, ULA ultimately declined to bid on at least four additional federal government launch contracts beyond those it already had on its books. The four new launches, cumulatively worth about $850 million, went to SpaceX, NASA and Pentagon records show.

Mr. Henry, the SpaceX executive, said the United Launch Alliance had no one to blame but itself.

“So they had a good thing going and got complacent,” he said. “And then to their misfortune, Elon and SpaceX showed up.”

Squeezing Upstarts

Mr. Beck, the chief executive of Rocket Lab, started the company in 2006, just four years after SpaceX was created and before SpaceX had sent its first rocket to orbit.

Since then, Rocket Lab’s Electron launch vehicle has had more than 40 successful trips to orbit, delivering almost 200 satellites to space at one of the lowest costs in the industry.

Now the second most frequent orbital commercial launch company globally behind SpaceX, Rocket Lab is moving to build Neutron, a larger rocket that will compete directly with SpaceX’s Falcon 9.

Mr. Beck said he had observed early on that SpaceX was willing to go after its business rivals.

He and other industry executives said they were convinced that SpaceX had set the price for its Transporter service — where small satellite companies can book slots on a Falcon 9 launch — with the explicit goal of undermining the financial plans of emerging competitors.

Transporter’s low price — initially $5,000 per kilogram — was below what some industry executives calculated was SpaceX’s basic cost. They concluded that SpaceX could only offer such a low price by subsiding those flights with some of its government contracting revenue.

More recently, SpaceX started what it called Bandwagon, which offers satellite makers launches to orbits that provide them better coverage over key sections of the world. SpaceX is selling these flights at far below its own costs to undermine its competition, Mr. Beck said, citing his own estimates.

“Bandwagon is like, the most bold and obtuse anti-competitive thing you can do,” said Mr. Beck, whose company charges about $21,500 per kilogram for its launches to specific orbits.

Mr. Henry, the SpaceX executive, disputed that SpaceX might be using its market dominance to hurt its competitors.

“We make money on all our launches,” he said.

Flights that carry multiple private and government payloads on a single Falcon 9 launch, he said, are benefiting the commercial space industry by making it more affordable for small firms to get satellites into orbit.

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.

“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Mr. Cantrell, whose company Phantom Space has received funding from NASA to help build its new launch vehicle, said his sales team had been told by Sidus Space and a second company that SpaceX had demanded contract provisions intended to limit their ability to hire other launch providers.

Carol Craig, the chief executive of Sidus Space, confirmed in an interview that SpaceX had a “right of first refusal” provision in a deal she had signed for five launches, allowing SpaceX to counter any offers from its competitors.

“Are they saying you absolutely have to? No,” she said, adding that her company has a nondisclosure agreement with SpaceX that prohibits her from discussing the exact terms of her deal. “It doesn’t feel like they’re trying to monopolize.”

But Mr. Cantrell said he was convinced that SpaceX was trying to block out emerging competitors.

“It’s anti-competitive and anti-American and I don’t like it,” Mr. Cantrell said.

Even with these impediments, Mr. Cantrell said he had been able to build a manifest with approximately $80 million worth of contracts for future launches. But he has been delayed in getting his new rocket built and operating because of trouble raising the necessary capital.

Fickle Billionaires

The concerns about SpaceX’s dominant position only escalated when Mr. Musk denied a request from Ukraine in 2022 to turn on his Starlink coverage over Crimea so that Ukraine could use it to target Russian military assets, as was first reported by Walter Isaacson last year in his biography of Mr. Musk.

Mr. Kendall, the Air Force secretary, said the Pentagon subsequently reviewed its contracts with SpaceX to address “whether I was comfortable depending upon billionaires and their potential fickleness for military services.”

The Pentagon announced soon afterward that it had reached a new deal with SpaceX for a satellite-communications system it calls Starshield that is much like the existing Starlink network, but “ will be owned by the U.S. government and controlled” by the Space Force, Mr. Musk confirmed. Reuters later reported that the National Reconnaissance Office, an intelligence agency, also has a classified $1.8 billion contract to get access to Starshield.

Pentagon officials said that SpaceX has honored its commitments.

But the Defense Department has moved recently to try to expand its launch providers, both for small payload launches and its most expensive, classified, national security launches.

Pentagon officials said that SpaceX had argued that another national security launch provider was unnecessary, an assertion that Mr. Henry did not dispute.

“We did say we don’t think there’s a supply shortage,” he said. “But we are all good. Competition is good.”

SpaceX’s Starship, its newest rocket, which is now undergoing testing, is likely to have a far lower price for hauling cargo to orbit than any of its competitors, according to industry analysts. Its rates to carry a satellite into orbit could be as low as $200 a kilogram, compared to $65,000 per kilogram by NASA’s Shuttle before it retired, or the $6,000 now that SpaceX charges for its Transporter flights.

That means SpaceX’s Falcon 9 and Starship could dominate the space launch industry for the decade to come, some industry officials predict, with Mr. Musk already projecting that SpaceX could deliver 90 percent of the world’s cargo to space this year even before Starship is counted, up from about 80 percent in 2023.

“There’s not a lot of industries where a company is doing like 80 percent of everything,” Mr. Musk told his employees, expressing pride over how dominant SpaceX has become.

Mr. Beck, the founder and chief executive of Rocket Lab, said no matter what actions SpaceX takes, he believes the best way to respond is to keep launching, including the climate science satellite his company put into orbit last weekend for NASA .

“Whatever shady practices he wants to do along the way, then so be it — we don’t care,” Mr. Beck said. “Because at the end of the day, you have to compete. And if you can’t compete, then you can’t compete.”

But Mr. Henry of SpaceX said that the impact of its continued expansion is clear to those inside the company.

“My heart bleeds for these small launch companies, right?” he said. “Because they’re not all going to make it. Most of them are not.”

Kenneth Chang contributed reporting from New York.

Eric Lipton is an investigative reporter, who digs into a broad range of topics from Pentagon spending to toxic chemicals. More about Eric Lipton

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Neuralink: A litigation team built from the sharpest, funniest tweeters is suing Elon Musk . Here’s a look at the saga that began in 2019.

Neuralink: Elon Musk’s first human experiment with a computerized brain device developed significant flaws, but the subject Noland Arbaugh, who is paralyzed and the first patient to take part in the human clinical trial , has few regrets.

Wooing World Leaders: Musk has fostered relationships with a constellation of right-wing heads of state — including Argentina’s Javier Milei and India’s Narendra Modi — to push his own politics and expand his business empire .

Tesla: Musk has gutted the part of the carmaking company responsible for building charging stations for electric vehicles , sowing uncertainty about the future of the largest and most reliable U.S. charging network.

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