Sport Contact Alpha Is A High-Performance Tyre Supply And Distribution Company Specialising: Category Management Assignment, UOL, Ireland

Case Study: Transitioning from tactical support to strategic enabling

Sport Contact Alpha is a high-performance tyre supply and distribution company specialising in a range of own-branded tyres designed to achieve maximum stability and control, ideal for contemporary family cars.  Constructed with a new micro flexibility compound, the tyre range provides optimum contact between rubber and road, resulting in better acceleration and shorter braking distances, in wet and dry conditions. Sport Contact Alpha has identified that in order to remain competitive in the global market it needs to cut costs and better leverage the potential of its significant global spend. Sport Contact Alpha has focused on its Procurement Function and has begun to review the biggest cost and risk areas with spend on the medium to luxury tyre range identified as a priority.

Sport Contact Alpha is organised around the products it supplied. The product teams report out of the R&D Function who assumes full responsibility for specification and supplier selection for key components and develop and maintain relationships with the key suppliers they want to work with. Purchasing is regarded as a support function whose role is largely to conclude the commercial arrangements. Product teams have little need to work cross-functionally. Tyres are critical items, many using highly complex multilayer technology, and product teams, therefore, work closely with their chosen supplier to optimise tyre design to the tyre manufacturing process. The company has a total of 20 different tyre suppliers, all in one country, of which around half maintain a close relationship with one or more product teams.

Purchasing ensure the contractual and commercial arrangements are defined in an agreement and respond to a weekly planning schedule and ensure tyre orders are placed in good time. Purchasing also attempt to defend any price increases and have carried out some benchmarking that suggest Sport Contact Alpha is paying too much for these products. Various ideas for reducing tyre spend has been proposed by the Purchasing Function, including aggregation of spend and sourcing from emerging markets, but these ideas have gained little traction with product teams who are reluctant to move away from existing arrangements.