Automotive Industry Overview
At present, the automotive industry is becoming highly competitive with the presence of numerous suppliers and OEMs offering leading-edge technology and products in the market. With the inflow of high capital investments, the industry has been facing relentless pressure to identify potential risks and mitigate risks effectively to increase their ROI. Moreover, the increasing interdependence between suppliers and buyers forces leading procurement organizations to advocate for robust category management. In the automotive industry, category management helps leading businesses gain an understanding of the organization’s key value objectives and develop a set of strategies.
The client approached SpendEdge to commission a category management study to understand the latest trends and identify potential opportunities. Through this study, SpendEdge’s category management analysts, with expertise in the automotive industry provided various salutary solutions, such as optimally sourcing a category and its sub-categories. Also, the solutions offered by SpendEdge facilitate further optimization of category spending, understanding budgets, and accordingly allocating resources.
Increased sales
Reduced cost
Improved margins
Improved efficiency
Business Challenge
A renowned automaker was facing predicaments in developing an effective strategic sourcing approach. The client wanted to assess the automotive industry’s market landscape in terms of the market dynamics, drivers, and key competitors dominating the market space. Furthermore, the client wanted to identify the barriers and potential opportunities to source the requirements effectively and manage the spending within an organization by aligning business objectives.
Our Approach
Our team at SpendEdge played a crucial role in assisting the client in optimizing their category management process. We conducted an in-depth evaluation of several critical factors with extensive research, including interviews and discussions with leading automotive industry stakeholders. The category management experts further collated information from various proprietary sources such as paid industry databases, company presentations, newsletters, and magazines in the automotive space.
By assessing the latest developments in the automotive industry, SpendEdge’s category management experts recommended the automotive industry client apply effective procurement category management methodologies, develop sourcing strategies that fit with business objectives, and negotiate contracts with suppliers that deliver optimal value. With the help of SpendEdge’s category management solution, the automotive industry client was able to devise a robust SWOT analysis and effectively analyze supplier pricing and cost structure.
Business Outcome
With the help of the category management solution, the automotive industry client was able to identify the key growth drivers and gain holistic insights into the category. The client was further able to gain a complete overview of the suppliers and forecast pricing in the automotive industry. These further reduced costs, increased sales, and improved gross margins by carrying out efficient negotiations with suppliers and minimizing markdowns on slow-moving products.
