Case Study: How a global South American manufacturer identified over $12.5M in annual savings through direct sourcing in China

Background:

A South American industrial group with global operations engaged CPG’s China sourcing services in mid-2023 to improve cost efficiency and expand its supplier base across Asia. The company’s original objective was to tap into China’s vast manufacturing ecosystem and reduce costs across 8 master product categories, with an estimated annual sourcing potential of $45 million USD.

CPG was retained to identify and vet qualified suppliers, negotiate competitive pricing, and manage sourcing workflows from factory to delivery.

Challenges:

• Historically limited exposure to Chinese suppliers, relying mostly on regional vendors
• Lack of visibility into current China market pricing for critical industrial categories
• Concerns about quality consistency, production oversight, and on-time delivery from new suppliers
• Internal resource constraints to support 1:1 engagement with hundreds of potential factories

CPG’s on-the-ground team in China was tasked with becoming a seamless extension of this organization’s sourcing function.

Results:

• Supplier Expansion:
  CPG vetted 191 suppliers across 38 product categories (2023–2024), providing access to a diversified base of capable, qualified Chinese manufacturers.
• Verified Cost Savings:
  CPG identified verified annual savings of 27%, far exceeding the initial goal of 22%, amounting to $12.5 million USD/year. Specific product-level results included:
  • Hammers  – 43% savings
  • Metal Bars – 21% savings
  • Filters– 76% savings
  • Bearings – 63% savings
  • Fiber Products – 40% savings
• Improved Payment terms: CPG effectively negotiated payment terms more favorable to their client, including a waiver of the down-payment fee
• Process Optimization – Container Utilization:
  CPG reviewed and improved loading configurations for multiple suppliers, achieving more efficient container fills:
  • Original load capacity: 330 cubic meters
  • Optimized capacity: 445 cubic meters
    This contributed to additional cost savings in international freight and container handling.
• Market Intelligence:
  CPG compiled and shared real-time Chinese raw material pricing sources, enabling our client to independently benchmark component and material costs going forward.

Conclusion:

Direct supplier engagement in China—when managed by a dedicated sourcing partner—can drive measurable savings, unlock supplier diversity, and increase control over end-to-end sourcing operations.  Collaboration with CPG’s China sourcing services exceeded initial savings targets and laid the foundation for a streamlined, scalable China sourcing strategy.

Lessons Learned:

• Supplier transparency delivers value. Direct access to manufacturers, when combined with on-the-ground vetting and negotiation, resulted in cost visibility and pricing leverage.
• Process improvement goes beyond price. Container analysis and smarter packaging practices added freight savings and reduced delivery complexity.

Ongoing market insight is power. With CPG’s benchmarking tools and supplier intelligence, our client gained long-term confidence in supplier negotiations and product pricing.