Our biggest savings did not come from material prices. They came from resolving the lack of coordination between procurement, warehousing, planning and logistics.
The client was a large manufacturing company. In the summer of 2025, everything appeared to be working:
- Revenue of approximately CZK 850 million
- More than 300 employees
- Annual procurement spend exceeding CZK 500 million
- Inventory worth approximately CZK 180 million
- Hundreds of suppliers
- Thousands of items
At first glance, both procurement and production were running smoothly. The warehouses were full, and materials were available.
Yet:
- The company faced increasing pressure on cash flow.
- Inventory levels were rising.
- Certain critical items were regularly out of stock.
- The same items existed under several different codes.
- Different departments purchased similar products from different suppliers.
- No one could accurately quantify the true cost of the supply chain.
The owner believed that purchase prices were the main problem.
The owner’s perspective
With annual procurement spend exceeding half a billion Czech crowns, it seemed logical that the greatest savings potential lay in tougher negotiations with suppliers. The owner therefore found himself asking more and more often: Are we really buying at the best possible prices? At the same time, he could not understand one thing: “How can our warehouses be full, yet we still occasionally run short of materials?”
Management’s perspective
Management saw the problem somewhat differently. Production highlighted shortages of certain critical materials. The warehouse teams reported a lack of space. Procurement raised concerns about prices and lead times. Logistics dealt with its own issues, as did planning. Each function managed its own part of the supply.
What the analysis revealed
We began working with the client by conducting a comprehensive analysis of procurement, warehousing, planning and the supply chain. The analysis revealed something surprising. The greatest savings potential did not lie in material prices. It lay in how the company managed its entire supply chain.
For example, we identified:
- Duplicate items in the system
- Inconsistent master data
- An unmanaged supplier base
- Different purchasing practices across departments
- Excess stock of some items
- Insufficient stock of other critical items
- No supplier evaluation process
- Very limited working capital management
The company’s problem was not with the individual parts of the system. It was that those parts did not work together.
The central insight
Our biggest savings did not come from material prices. They came from resolving the lack of coordination between procurement, warehousing, planning and logistics.
From analysis to tangible change.
As with the previous commercial transformation, it became clear that analysis alone would not change anything. Someone had to take responsibility for implementing the changes. Two key managers from BM4U therefore took on this role.Stejně jako u předchozí obchodní transformace se ukázalo, že analýza sama o sobě nic nezmění. Někdo musel převzít odpovědnost za realizaci změn. Tuto roli proto převzali dva klíčoví manažeři z BM4U.
Supply Chain Manager
His responsibilities were to align procurement management across the company, map actual purchasing flows, consolidate the supplier base, introduce a supplier evaluation system, optimise inventory, connect procurement, warehousing, logistics and planning, and manage working capital.
For the first time, the company began managing its entire supply chain as a single economic system.
Project Manager
His responsibilities were to manage the implementation of the new ERP system, harmonise data structures, clean up material master data, eliminate duplicates, standardise processes and prepare the organisation to use AI.
At the same time, the first phase of AI implementation was launched.
Step one: Bringing the data into order
During the first few months of the project, it became clear that the company did not actually know precisely:
- What it was buying
- Who it was buying from
- On what terms it was buying
- How much each category was really costing
It was therefore necessary to:
- Clean up master data
- Eliminate duplicates
- Consolidate the supplier database
- Define responsibilities
- Introduce transparent reporting
Only then could procurement begin to be managed on the basis of data
Step two: Consolidating suppliers and optimising inventory
One of the biggest problems was the large number of suppliers. Many supplied similar or identical items. There was no centralised approach, no systematic evaluation and no strategy.
We gradually:
- Consolidated suppliers
- Harmonised purchasing terms
- Introduced regular evaluations
- Established minimum required standards
At the same time, we reassessed inventory. We found that tens of millions of Czech crowns were tied up in stock the company had virtually no need for. Conversely, certain critical items were not being managed at all.
Step three: Implementing ERP and using AI
Once processes had stabilised, implementation of the new ERP system began. The objective was more than simply deploying new software.
The objective was to connect procurement, warehousing, production, logistics and planning.
The first AI models began providing support primarily in:
- Forecasting
- Consumption planning
- Inventory management
- Supplier evaluation
- Reporting
The result was more than better decision-making. The administrative workload of a wide range of processes was also significantly reduced.
Results after 12 months
After a year of working together, neither the production facility nor the manufacturing technology had changed.
What had changed was the way the entire supply chain was managed.
| Metric | Before the change | After 12 months |
| Annual procurement spend | CZK 500 million | Similar spend |
| Direct savings in procurement and the supply chain | – | CZK 38 million |
| Inventory | CZK 180 million | CZK 130 million |
| Working capital released | – | Approximately CZK 50 million |
| Active suppliers | 700+ | Approximately 460 |
| ERP | Original setup | Implementation in progress |
| AI | Not used | First phase operational |
| Administrative staffing | Baseline | Reduction of 12 positions |
The first wave of automation and process changes made it possible to reduce administrative and support staffing by 12 employees without negatively affecting the company’s performance.
This generated further significant savings in operating costs.
The project continues
As with the commercial transformation, this is only the first phase.
Work is under way on:
- Completing ERP implementation
- Extending AI to additional processes
- Further consolidating the supplier base
- Automating planning
- Advanced inventory management
- Automating procurement processes
Once the second phase is complete, we expect:
- Further inventory reductions
- Further reductions in administrative staffing
- A reduction in required staffing of up to approximately 30 positions
- Further optimisation of working capital
- Further improvements in transparency and control across the entire supply chain
From the second year of our engagement, we estimate the project’s total benefit in procurement and the supply chain at CZK 75 million per year. Further operating savings from digitalisation, ERP and the use of AI will come on top of this.
What business owners should take away
Many manufacturing companies view procurement as a support function. In reality, procurement, planning, warehousing, logistics and supplier management determine how tens of millions of Czech crowns are used each year. Once procurement spend reaches hundreds of millions, supply chain management becomes a strategic discipline.
It directly affects:
- Profitability
- Cash flow
- Working capital
- The ability to grow
- Resilience in times of crisis
Successful companies therefore do not manage procurement as a set of separate activities divided among production, warehousing, logistics and administration. They manage the entire supply chain as a single economic system. This is precisely where an experienced Supply Chain Director comes in. The role goes beyond negotiating better prices. It requires a manager who can bring procurement, suppliers, warehousing, planning, production, logistics, working capital, ERP and now AI together into a functioning whole.
In our case, this change delivered the following within the first 12 months:
- CZK 38 million in direct savings
- Approximately CZK 50 million in working capital released
- A reduction in administrative staffing requirements equivalent to 12 positions
- Significantly greater transparency and control
Once the subsequent phases are complete, we expect a total benefit exceeding CZK 75 million per year. This goes beyond operational procurement. It is strategic business management.
Our biggest savings did not come from material prices. They came from resolving the lack of coordination between procurement, warehousing, planning and logistics.