Case Study: a leading packaging material company achieves procurement cost savings with Fractal

Optimize order volume and frequency to cut costs

The client, a leading packaging material company, faced a challenge in its procurement process due to conflicting objectives with its suppliers. The suppliers preferred longer production runs, while the company required more flexibility. This situation made it difficult to balance cost reduction with the need for inventory and production flexibility, impacting overall product costs. Fractal was engaged to address this strategic challenge.

Fractal implemented a solution using mathematical optimization techniques, including linear programming, to harmonize demand data and define optimal purchase volumes and frequencies. This approach balanced order efficiency with flexibility and included simulations to forecast outcomes and assess risks. The results delivered by Fractal were significant, saving the client an estimated $1 million per material per cycle. Furthermore, the strategy reduced inventory holding costs, minimized scrap risk, and freed up working capital, leading to enhanced cash flow.