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Our client is a major power producer and utilities provider in SouthEast Asia. Our client is under pressure to reduce their cost base. Input and equipment costs have increased significantly in recent years, and equipment capex is a large portion of our client’s annual expenditure.

In particular, our client would like to reduce its spending on procuring power distribution equipment. They are still using the conventional approach of procurement, which involves open and selective tender of pre-qualified vendors.

Our client’s product is a 11kV RMU (Ring Main Units), which is key equipment needed for power distribution networks. Copper is a substantial raw material used in the production of RMUs, and copper prices have increased 4-fold in last 3 years: from $1k to $4k per ton.

Currently, our client is on an annual purchase cycle of 3000 units and an average price of $25k/unit. Ad-hoc volume is 5% of the annual purchase, priced at $30k/unit.

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