Situation:

• Vitesse Systems is an Aerospace and Defense manufacturer formed through the combination of four separate firms, each with distinct products, manufacturing processes, and vendor management approaches. The central challenge was integrating four locations into a single operating entity and maximizing cost efficiencies across the combined business.
• Purchasing lacked advantageous contracts. The business was executing a series of spot purchases at above-market prices. Suppliers had raised pricing during the commodity inflation cycle of 2020 to 2022, but had been very slow to adjust rates back down as commodity markets turned.
• Many supplier agreements were based on local historical relationships, resulting in pockets of above-market pricing across categories that had never been competitively tested.

Insights and actions:

• Inside Consulting employed a range of sourcing strategies, including direct negotiations, multi-round tenders, and live-bidding events with reverse auction ranking to maximize competitive tension across the supply base.
• We developed a prioritized approach based on impact, effort, and risk — sequencing commodity categories first to generate quick savings and fund the broader effort, then addressing lower-leverage categories requiring more creative solutions or supplier development. Tooling and shipping each yielded 20% savings; MRO yielded 10%.
• We developed customized index-adjusted pricing for raw materials to deliver savings during commodity downturns and reduce the time required to source individual purchases, converting a reactive spot-buy process into a structured, market-linked framework.
• For tooling and MRO, we negotiated contractual terms superior to those offered by leading Group Purchasing Organizations (GPOs). We also engaged directly with shop floor leadership to identify and correct process inefficiencies, including optimizing coolant usage and improving metal recycling rates.

Impact:

• Annual EBITDA improvement of $2.4 million, driven by procurement savings representing 30% compression off addressable spend.
• $600K in quick-payback savings across tooling, MRO, and shipping categories.
• $300K in savings from raw material sourcing innovations, including index-adjusted pricing frameworks.
• $850K in savings from addressing lower-leverage categories with novel commercial solutions.
• Negotiated improved vendor-managed inventory and consignment inventory agreements, strengthening Vitesse’s cash conversion cycle.
• Improved supply chain resilience by identifying and qualifying alternative suppliers for critical components, reducing single-source dependency across key categories.