Defense Contractor Drives Cost Savings Through Strategic Sourcing

The challenge

The client was six months behind schedule in executing strategic cost savings targets established by new leadership for upcoming contracts, despite having a Rapid EBITDA improvement program in place. Execution challenges persisted, compounded by existing two-year supplier contracts and a desire to transition to longer-term agreements spanning three to five years. Weak enforcement of policies and process requirements slowed sourcing activities and introduced audit risks, while limited training of the buying team and a lack of standardized processes further increased compliance concerns.

The solution

Protiviti led a strategic sourcing initiative to reduce Bill of Materials (BoM) costs and drive savings. The team analyzed procurement data from legacy systems and offline sources to develop a savings roadmap while ensuring all activities aligned with federal compliance standards, including DFARS, FAR, NIST 800-171, and CMMC Level 2. Protiviti also developed and presented supplier selection business cases to cross-functional leadership, securing approvals prior to contract execution. Protiviti led analysis and strategy development to balance cost savings targets, supplier rationalization and transition plan to realize savings and complete an EBIDTA business case to executive leadership.

To execute, Protiviti deployed a team to implement a structured sourcing playbook and negotiation strategy, covering roughly 5,000 direct BOM parts. Acting as embedded commodity managers, the team conducted detailed bid and scenario analyses, led negotiations, supported supplier awards, and strengthened CPSR compliance through documentation and training. In parallel, Protiviti led insourcing efforts for painting and upper-level assemblies, performing make-versus-buy analyses and presenting changes to the client’s control board, while mapping SAP processes to standardize workflows and accelerate savings realization.

The results

The engagement delivered significant, measurable cost savings and operational improvements, achieving approximately 7% in savings per vehicle across sourced parts and through paint and assembly insourcing, with value realized across thousands of BOM components and further supported by supplier base consolidation to increase purchasing power and reduce administrative burden. The client also strengthened long-term performance by streamlining sourcing processes, embedding continuous improvement practices, and enhancing compliance readiness through detailed documentation, market analysis, and CPSR-aligned supplier justification, while standardized executive reporting and daily cross-functional coordination improved visibility, accelerated savings realization, and reinforced disciplined, efficient operations.