About

Tenet Q&A: Strategic Sourcing and Supply Chain Transformation

I. Value, ROI, and Financial Structure

1. What is Strategic Sourcing, and how does Tenet Consulting approach it?

Strategic Sourcing is a disciplined, data-driven approach that reduces costs, increases supply chain resiliency and innovation by evaluating and optimizing an organization’s purchasing activities.

Tenet’s Approach: Unlike others who stop at recommendations, our approach is focused on execution and building internal capability. We embed with your teams and spend the time to learn about your business to align with your reality, not a predetermined plan, using our proven 7-Step Process to deliver real cost savings that you realize in the P&L.

Our track record demonstrates significant financial impact, typically delivering a 6-15X ROI on the consulting engagement as measured in our fees vs the savings captured by our clients.

Specific client results have included:

  • 10-25% in average direct material cost reduction.
  • 30% or greater supplier rationalization resulting in streamlined purchasing and enhanced leverage.
  • Measurable improvements in supply chain resilience, quality and delivery performance.

Our team works until the value is realized and reflects directly in your P&L, not just a theoretical report.

Our fee structure is designed to be highly flexible and results-driven, prioritizing realized value over hourly billing. We offer a customized blend of models:

  • Retainer + Success Fee: A fixed monthly retainer combined with a performance-based fee tied directly to a percentage of the realized cost savings achieved and sustained.
  • Fixed-Price Project: For highly scoped, targeted category optimization projects where the outcome is clearly defined.
  • Risk-Share Model: We can structure agreements where a portion of fees are contingent upon hitting agreed-upon P&L metrics, demonstrating our confidence in delivering the promised ROI.

Savings verification is non-negotiable and is the key to our success-fee model. We utilize auditable, KPI dashboards that track:

  • Baseline Verification: Jointly agreeing on the pre-engagement cost baseline .
  • Post-Implementation Tracking: Monitoring actual spend against the new contracted rate post-implementation utilizing your actuals or forecasted volumes.
  • Financial Integration: Working directly with your Finance team to ensure the cost reduction is correctly identified in the P&L, whether that be in Purchase Price Variance (PPV), product variances or product cost, depending on timing of realization in the product or budget cycle.

II. Risk Mitigation and Execution

5. How quickly can we expect to see tangible cost savings?

We focus on “Speed to Savings.” While full implementation follows the 7-Step Process takes time, our clients will have a solid understanding of the cost savings potential in the RFP Analysis phase

The initial impact comes from rapidly executing quick-win opportunities and negotiating interim performance improvements. The majority of the savings are realized throughout the contract implementation phase, depending on implementation timing whether that is on-cycle with the next product development cycle or off-cycle via a running change in current serial production.

Mitigating risk is core to our strategy. We employ a dual-layered approach:

  • Supplier Tiering and Segmentation: We analyze the risk profile of every supplier in the network, moving beyond unit cost to evaluate financial stability, geographical concentration, and compliance history.
  • Performance-Based Contracts: We build resilience directly into new contracts, including index-based pricing, guaranteed capacity planning, and multi-region sourcing strategies depending on your company’s specific needs.
  • Knowledge Transfer:
    • Hands-on training, delivered alongside real work
    • Classroom-style workshops on the 7-step process, presentation skills, supplier assessment, and strategic negotiations
    • Templates and best practices to use throughout the project and beyond
    • Business intelligence coaching to interpret data, manage KPIs, and drive decisions
    • A structured, repeatable sourcing approach that endures long after the project ends

Our 7-Step Process is a proven, repeatable framework, but it is highly adaptable at the execution level. We customize the following aspects:

  • ERP Integration: Our tools are designed to utilize data from existing ERPs (SAP, Oracle, etc.), pulling in necessary data without requiring system changes.
  • Governance Structure: The implementation timeline and reporting cadence are fully customized to your internal governance requirements and executive calendar.
  • Component Specifications: We align all sourcing strategies with your Engineering department’s technical specifications to ensure quality and compliance are never compromised for the sake of cost reduction.

III. Expertise, Focus, and Methodology

8. Who is Tenet Consulting’s ideal client, and what specific high-value spend categories do you focus on?

Our ideal client is a mid-to-large-cap manufacturing or industrial organization with complex global supply chains, typically generating $500M to $10B+ in annual revenue. We specialize in engagements where rapid, realized savings are paramount, focusing on the highly complex spend categories that drive your core profitability.

Key Industry Verticals:

  • Agriculture & Construction
  • Power Tool Manufacturing
  • Industrial Manufacturing
  • Power Sports
  • Automotive Manufacturing
  • Energy and Utilities
  • Private Equity Portfolio Companies.

Category Spend Expertise (Direct Materials Focus): We primarily focus on Direct Materials (raw materials, high-spec components) and complex Indirect Materials where the annual spend requires deep category expertise—often 7-figure annual spend or higher—to achieve the proven 10-25% cost reduction.

Every Tenet Consulting engagement is led by a Managing Partner with decades of experience in supply chain transformation and sourcing. Our team brings a dual perspective: we have worked both as clients (in your position) and as consultants.

This direct experience ensures we understand operational realities and build solutions that last.

Tenet Consulting has a proven global delivery model focused on highly complex, multi-region projects. While our core leadership is US-based, our methodology is designed for global application:

  • Global Supplier Research: Our Step 1 (Supplier Research) includes deep evaluation of the global market, ensuring access to suppliers in low-cost and strategically important regions.
  • Site Visits: We lead structured, in-person site visits to suppliers around the globe to assess operational readiness, equipment, systems, and cultural fit.
  • The majority of our clients are multinational corporations with global manufacturing and supply chain footprints. We have numerous decades of working with and for Fortune 500 companies and have worked in the global business environement in all cases.

Recently we completed a successful engagement with a $20B OEM with 30+ manufacturing plants located across four continents.

Yes. Before any optimization begins, we conduct an initial assessment of your supply chain to understand the current state and how it compares to our prior experience. This includes:

  • Spend Analysis & Peer Comparison: We identify where your cost per component or service exceeds best-in-class industry standards, highlighting the potential for savings by category.
  • Internal Process Audit: Comparing your procurement team’s methodology against the best practices codified in our 7-Step Process.

While our core focus is on high-impact Direct Materials (where 7-figure annual spend or higher exists), we strategically target complex Indirect Materials and Tail Spend when it is under-leveraged and creates significant drag on profitability. We often achieve high savings (15%+ annualized) in fragmented spend areas by:

  • Consolidation Strategy: Aggregating low-volume suppliers into a small number of high-leverage partners.

Our 7-Step Process is a structured, repeatable methodology designed to transform sourcing into a strategic advantage, moving from clarity to realized value:

  1. Supplier Research
  2. RFP Development
  3. Supplier Conference
  4. RFP Analysis
  5. Supplier Site Visits
  6. Negotiations
  7. Supplier Selection

1. Supplier Research

  1. Summary: We begin by conducting deep industry and market research to build a robust, qualified supplier database tailored to your category and goals. This goes well beyond your current supplier base. During this pre-qualification stage, we assess capabilities, cost structures, industry-specific challenges, and production capacity. The result is an expanded supplier landscape that reveals overlooked opportunities, sets true industry benchmarks, and creates competitive leverage that traditional approaches miss.
  2. Why it matters: Many supply chains default to familiar suppliers or settle for suboptimal terms. Creating competition among current and new partners introduces cost pressure, while driving innovation and better performance.
  3. Result: A more competitive, diversified supplier set—ideally with a 3:1 ratio of new-to-incumbents—that leads to better pricing and terms, reduces risk, and creates meaningful leverage for the future.

2. RFP Development

  1. Summary: With the supplier landscape mapped, the next step is building the right framework for engagement. We collaborate with cross-functional teams to develop a tailored Request for Proposal package—including a qualitative Request for Information and quantitative Request for Quotation—that captures technical requirements and strategic priorities. This requires suppliers to respond clearly and competitively, enabling transparent cost modeling down to materials, labor, and overhead. The stage is then set to select the most compelling and competitive suppliers to move forward in the process.
  2. Why it matters: A well-structured RFP elevates supplier accountability and creates the foundation for better commercial outcomes. When cost inputs are transparent and expectations are explicit, the negotiation stage becomes more productive—and the eventual contracts become more enforceable.
  3. Result: Strong supplier engagement, higher-quality proposals, greater transparency, and a clear edge moving forward in the process.

3. Supplier Conference

  1. Summary: We position your company as a customer worth competing for. Through structured executive briefings and trade show-style presentations… we introduce your business, clarify expectations, and outline the opportunity ahead. These conferences elevate supplier interest, foster alignment, and enhance the quality of proposals, ultimately improving your leverage through the remainder of the process.
  2. Why it matters: When suppliers see the competition firsthand and understand your transformation goals, they gain a clearer picture of what it takes to win your business. They engage more seriously, compete more aggressively, and arrive ready to negotiate.
  3. Result: Stronger supplier engagement, higher-quality proposals, greater transparency, and a clear edge in negotiations.

4. RFP Analysis

  1. Summary: We evaluate supplier responses using structured scoring frameworks and savings analyses to create a clear view of market opportunity and savings potential. By normalizing inputs across materials, overhead, and commercial terms, we enable apples-to-apples comparisons and expose meaningful differences between suppliers. This analysis removes emotion from the process, highlights potential suppliers and, and surfaces untapped value others miss.
  2. Why it matters: Without structured analysis, critical differences between suppliers get buried. Smart decisions require clean comparisons and clear tradeoffs.
  3. Result: A clear market view, a prioritized supplier shortlist, and a confident foundation for further analysis.

5. Supplier Site Visits

  1. Summary: With a shortlist of high-performing suppliers in hand, we move from analysis to validation. We lead structured, in-person site visits to assess operational readiness, equipment, quality systems, and cultural fit. These on-the-ground evaluations provide a direct look at capabilities, highlight potential risks or gaps, and can even reveal opportunities that don’t appear in RFPs.
  2. Why it matters: A supplier might look great on paper, but only a visit can reveal what they can actually deliver. Site validation reduces risk and sharpens your decision-making.
  3. Result: A deeper understanding of prospects and confidence in a short list of validated suppliers that move forward to negotiations—all grounded in direct observations and onsite interactions.

6. Negotiations

  1. Summary: We lead structured, data-backed negotiations that turn supplier insights into best-and-final offers. Our approach optimizes both price and non-price terms—including service levels, timelines, and warranty accountability—while maintaining goodwill. By anchoring discussions in fact, not fiction, we protect relationships, align incentives, and secure outcomes you can measure and manage.
  2. Why it matters: Great deals balance cost, capability, and continuity. Smart negotiations protect relationships while aligning incentives around value.
  3. Result: Final offers that maximize value, mitigate risk, and strengthen supplier partnerships—without compromising future collaboration.

7. Supplier Selection

  1. Summary: We structure supplier comparisons and business case development to finalize award decisions, build your category strategy, and recommend transitions. Scenario analysis helps model outcomes and risk, leading to an approved supplier list, enforceable contracts, and a solid foundation for implementation… This approach preserves goodwill while ensuring the best commercial and operational outcome. Beyond award decisions, our process sets the stage for continuous innovation, stronger partnerships, and more resilient operations.
  2. Why it matters: Choosing a supplier is a strategic commitment. The right selection balances near-term savings with long-term strength based on greater transparency and incentives to innovate.
  3. Result: An approved supplier list and transition foundation designed to lower cost, reduce risk, and strengthen supply continuity—all while encouraging innovation and preserving critical relationships.

This process ensures speed to savings and long-term sustainability.

  1. Bespoke Strategic Data Ecosystem: We reject rigid, “black box” software in favor of a fully customized, agile data environment engineered specifically for your infrastructure. We architect a unified data layer—synthesizing complex spend & product data, RFQs, RFIs, and unstructured data—to create a single, immutable source of truth that adapts as project needs evolve.
  2. AI-Accelerated Sourcing Automation: We leverage machine learning capabilities to drastically reduce cycle times in the RFP process. Using predictive models, we automate high-friction tasks—such as intelligent RFI scoring and response analysis—allowing your team to move from data gathering to strategic decision-making rapidly.
  3. Dynamic ROI Command Center: We build out an analytic interface which serves as a real-time cockpit for your sourcing initiative. We deploy interactive, high-fidelity dashboards that provide granular visibility into cost-savings trajectories and critical project milestones, ensuring that every opportunity identified is tracked through to create value.

We deliver realized results through a partner-led execution model that manages internal change friction. This includes: Partner-led oversight to ensure executive alignment and remove organizational roadblocks; deep integration with cross-functional teams (Procurement, Engineering, Finance); and remaining engaged through contract execution to guarantee financial impact hits the P&L.

Our mandate is to build sustainable, repeatable capability. We achieve this through:

  • Knowledge Transfer, including hands-on training in our Strategic Sourcing Methodology.
  • Skill-based negotiation coaching to maintain savings and leverage in future contracts independently.

Our success depends on internal collaboration. We build buy-in by:

  • Joint Ownership: Establishing shared performance metrics that reward both the Tenet team and the internal department for realized savings.
  • Capability Transfer: Framing the engagement as a training opportunity—leaving behind a superior methodology and refined skillsets—rather than a temporary fix.
  • Partner-Led Communication: Our Managing Partners actively champion the strategy at all executive and operational levels to maintain clear alignment and commitment.

We view savings as the foundation for innovation. Our approach fosters innovation in two primary ways:

  1. Supplier Collaboration: We structure contracts to include mandated joint innovation projects, rewarding suppliers who introduce new component technologies or efficiency gains.
  2. Category Strategy: Our analysis identifies “innovation potential” within spend categories, directing R&D dollars to high-leverage partners who can deliver competitive advantages in areas like lightweighting or digitalization.

As noted by one of our clients, the sourcing program became a “cash machine—first from cost savings, then from innovation.”

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