How did an automotive OEM cut raw material price amendments from 4 weeks to 2 days?

The context

Client and industry

The client is a large Indian automotive OEM with more than ₹10,000 Cr in revenue and multiple plants in India. Its name is withheld for confidentiality, and all figures were reviewed and approved by the customer.

• Industry: automotive OEM
• Scale: ₹10,000+ Cr revenue
• Footprint: multiple plants in India
• Supply base: 500+ suppliers and 20,000+ parts

The company was growing fast, but its cost control was not.

The problem

The challenge

Every raw material price change meant a month of spreadsheets.

Metal and polymer prices changed every few weeks, and each change touched thousands of parts and hundreds of suppliers. Costing ran on disconnected Excel files. Price revisions took a month, supplier claims went unchecked, and money leaked out quietly with every cycle.

This is what one typical steel revision set off before Cost It Right, based on averages from the 12 months before go-live:

• 1 steel index revision affected 2,500 active part costings
• 12 engineers rebuilt those costings in Excel
• It took 3 to 4 weeks from the index change to an approved price

The question the company had to answer: how do we react to every price change in days, pay suppliers only what the index justifies, and do it without adding people?

The problem

Why existing methods fell short

Excel-based costing and email-based sourcing could not keep up with the pace of price changes. The team was up against six problems:

• Paying claims it could not check: suppliers sent price increases based on their own rates, with no quick way to test them
• Many versions of the truth: each engineer kept cost cards in personal Excel files that rarely matched the ERP
• Quotes that could not be compared: suppliers replied by email in their own formats, so awards took 4 to 6 weeks
• Knowledge that walked out the door: when a senior engineer left, years of formulas and history left too
• Weeks to add a supplier: new vendors waited around 6 weeks for forms, audits and approvals
• Audits that took days: every audit query meant digging through mail threads and old files

The solution

How Cost It Right solved it

Cost It Right (CIR) by Softude gave the company one system for costing and sourcing, rolled out in three phases over 10 months.

The team scored an ERP add-on, a global costing suite and an in-house build against four needs: part-level costing, formats for Indian processes, time to go live and ERP integration. Cost It Right was the only option that met all four.

• Months 1 to 3, masters and costing: weeks 1 to 10 went to cleaning masters, then 25,000 part costings moved out of Excel into standard cost cards
• Months 3 to 5, indexation and amendments: metal grades were linked to live indexes, so every change is simulated before approval
• Months 5 to 10, sourcing and vendors: the RFQ portal, auctions and vendor onboarding went live in month 7 with the top 50 suppliers first, and all suppliers were on by month 10

Clean data had to come first. The old Excel files held duplicate RM grades, outdated machine rates and costing logic that differed from plant to plant, so a joint team spent the first 10 weeks agreeing one standard format per process and cleaning every master.

Then suppliers had to come on board. Most were used to quoting by email, so the portal started with the top 50 suppliers by spend and the rest joined over the next three months. All modules were live in month 7, and more than 180 users now work in CIR across costing, purchase, engineering, finance and plants.

Today the same steel revision is handled in two days:

• Day 1, index updates: the new steel rate flows in from the external index
• Day 1, impact simulated: every affected part, assembly and vehicle is repriced
• Days 1 to 2, claims checked: each supplier claim is compared with the index-justified rate
• Day 2, approved: approvers see the full impact before signing off
• Day 2, ERP updated: new prices sync to purchase orders automatically

The impact

Results and business impact

A month of work now closes in two days. "Before" is the 12 months before go-live and "after" is the second full year of use.

Savings in the second year of use were an estimated ₹48 Cr, more than the total first-year cost of the platform:

• ₹31 Cr from index-validated amendment claims
• ₹14 Cr from should-cost backed negotiation
• ₹3 Cr from reverse auctions on logistics and indirect spend

Worked example: in one steel revision, suppliers claimed +₹4.20 per kg while the index justified +₹3.10. The ₹1.10 gap on 2,400 tonnes bought came to ₹2.6 Cr in payments avoided.

How the numbers were measured: times are averages over 26 amendment cycles, 3,100 costings, 410 RFQs and 140 onboardings. Amendment savings are the claimed increase minus the increase justified by the index named in each supplier contract, times quantities actually bought, counted as payments avoided rather than claims rejected. Negotiation savings are the first quote minus the awarded price, only on parts where a Cost It Right should-cost was used. Auction savings are the last purchase price minus the auction award. Each rupee sits in one category only, and all figures were reconciled by the customer's finance team.

The impact

Key takeaways

• Linking metal grades to live indexes turned a 3 to 4 week amendment cycle into 2 days
• Checking every supplier claim against the index named in the contract saved ₹31 Cr in a year, counted as payments avoided
• Clean, standard masters came first: 10 weeks of data cleaning made the automation possible
• Starting the supplier portal with the top 50 suppliers by spend got adoption moving before the rest joined
• Costing knowledge now stays in the system instead of leaving with people

"When one of our senior costing engineers retired, we lost nothing. His formulas, versions and approvals were already in the system." Head of Cost Engineering, name withheld.