Transforming Elkay’s Vendor Strategy

Client: Elkay is a leading American manufacturer known for its high-quality stainless-steel sinks and water delivery products. Over the decades, Elkay has expanded its product offerings to include faucets, drinking fountains, water coolers, bottle-filling stations, and kitchen cabinets. With over 3,500 employees globally, Elkay is a leader in delivering innovative plumbing and water delivery solutions for both residential and commercial markets.

Challenge: Elkay sought to enhance its supplier base to drive efficiency and cost savings. The company needed a more strategic approach to identifying reliable, cost-effective vendors for its operations. To achieve this, Elkay turned to Strategic Systems International (SSI) to streamline and optimize its vendor selection process. Over two years, SSI worked closely with Elkay’s management, leading multiple rounds of negotiations and leveraging advanced optimization models to transition from incumbent vendors to more efficient, high-performing suppliers.

Solution: SSI implemented a comprehensive approach to vendor optimization, focusing on key areas:

• Demand Analysis: Evaluated raw material requirements to accurately forecast sourcing needs.
• Supplier Modeling: Analyzed supplier responses, including pricing structures, discount schemes, and incentives.
• Supplier Selection: Utilized mathematical optimization modeling to identify the ideal mix of suppliers for each product and facility.

This rigorous process ensured that Elkay could make informed decisions and select the best vendors to meet its operational and financial goals.

Result:

• Cost Reduction: Achieved an 11% reduction in sourcing costs in the first year, with an additional 5% reduction in the second year.
• Material Costs: Lowered annual material costs from $50 million to $42 million, demonstrating significant cost-saving benefits.
• Operational Efficiency: Enhanced vendor selection processes, resulting in improved supplier relationships and optimized procurement strategies.