In the logistics industry, efficient procurement processes are crucial for maintaining smooth operations and minimising costs. LGI (Logistics Group International GmbH), a market leader with 5,000 employees, faced tail-end spend challenges, including long lead times and soaring process costs.
Find out how, with the help of Unite’s procurement solutions, LGI was able to unify processes and streamline purchase-to-pay (P2P) and indirect procurement operations.
The success story at a glance
- Procurement team struggling to meet the needs of 350 requisitioners in Europe.
- Inefficient, time-consuming and costly P2P processes.
- Long delays for requisitioners from order to delivery.
- Limited control over supplier choice and maverick buying.
- In-house procurement tool with no manufacturer support.
- 80% of orders are now placed using Mercateo.
- The wide choice of products has significantly reduced maverick buying.
- Staff get the items they need quickly and efficiently.
- Procurement process costs and team effort have decreased.
- Mercateo Marketplace to take care of tail-end spend.
- Mercateo Procurement Portal for efficient, user-friendly P2P processes.
- Unite BusinessShop to give employees access to known suppliers.
- Unite BusinessShop Plus to benefit from exclusive agreements with suppliers.
- View Management for greater control over what teams can buy.
Putting a stop to process problems
LGI provides industry-specific supply chain solutions – from automotive and electronics to healthcare and fashion – for customers across Europe. Considering its own streamlined services, this approach was missing from its procurement processes.
The procurement team was using a customised tool, not supported by the manufacturer, and all orders, suppliers and items still needed to be created manually. This meant long lead times, high processing costs, and an unmanageable workload. Knowing the existing process was unsustainable, LGI started looking for a better option.
Discovering a different way
While attending a purchasing expert panel, LGI’s Head of Corporate Procurement Uwe Rehorsch heard about Unite. “We then compared different solutions based on necessary interfaces, and the availability of marketplace solutions and costs,” said Uwe.
LGI needed a solution that could handle tail-end spend and the procurement of frequently used items, from office supplies and consumables to occupational safety equipment and IT accessories.
“The most important thing for us was the ability to integrate into our group structure – several companies, with different locations and billing addresses,” he said. After an in-depth selection process, Unite’s Mercateo Marketplace and Procurement Portal came out on top.
Decentralised and in the driving seat
With no need for integration with an ERP system, LGI chose to use Mercateo as a web-based solution. This gave 350 staff members in distributed teams a standardised P2P process and access to the Mercateo Marketplace – an online spot market with vetted suppliers built in. Approval workflows and view management, which hides items from certain ECLASS product groups, make the P2P process more efficient.
“Now the central purchasing department is responsible for supplier management and the management of the product portfolio,” explained Sonja Augustin, Strategic Purchaser at LGI. In particular, staff can search for what they need from known supplier catalogues (BusinessShops) and benefit from negotiated prices with BusinessShop Plus.
Money saved and measuring success
Since implementing the Mercateo Marketplace and Procurement Portal in 2017, LGI has experienced noticeable benefits when it comes to tail-end spend.
The large portfolio of products on offer has reduced maverick buying and means we don’t need to add any new suppliers to our system.
“By forwarding orders directly to the supplier, throughout times are much shorter, and costs have significantly reduced. We’ve also been able to automate other processes too,” said Uwe.
While the initial transition to Unite’s solutions by decentralised buyers was met with some trepidation, LGI invested in training and educating staff to encourage adoption. This, combined with a user-friendly interface, meant any reluctance was overcome in the first few years. After three years, 80% of orders are placed using the Mercateo Marketplace.
Next steps with Unite
Our partnership with LGI is a great example of how the Mercateo Marketplace and Procurement Portal can streamline indirect procurement processes, improve operational efficiency, reduce process costs and ensure a more unified procurement experience for widely distributed teams.
The goal is to integrate our locations at national and international level into a uniform ordering platform with electronic workflows. This will significantly reduce process costs, ensure compliance and provide us with centralised access to relevant reporting data.
Looking to the future, LGI wants to increase the use of Unite solutions in its various locations and benefit from new features currently in development. “We plan to continue working closely with Unite so we can be supported and help shape the future of the platform,” said Sonja. “We don’t want to stand still but keep developing together.”
About LGI Logistics Group International
Legal form: GmbH
Headquarters: Herrenberg, Germany
Headcount: 5,000 (worldwide, 2023)