Spend Analysis Helps an Automotive Industry Client Reduce Procurement Lead Times and Material Spend
Overview of the Automotive Industry Typically, the automotive industry retails new and used motor vehicles mainly through dealerships, commission agents, and car auctions. Over the past five years, the rise in per capita income is driving revenue growth for the automotive industry. The introduction of new energy-efficient vehicle models is also contributing to an increase […]
Overview of the Automotive Industry
Typically, the automotive industry retails new and used motor vehicles mainly through dealerships, commission agents, and car auctions. Over the past five years, the rise in per capita income is driving revenue growth for the automotive industry. The introduction of new energy-efficient vehicle models is also contributing to an increase in sales as consumers are moving away from high gasoline-consuming vehicles.
However, a few factors are expected to influence the growth of automotive industry in the coming years.
- The price-cost gap narrows: Price and regulatory pressures mean players across the automotive industry have little or no margin of error when it comes to making the right decisions on how to differentiate themselves. As a result, automotive industry firms need to identify ways to impose markups for mandated content and to tighten annual cost improvement.
- Greening gets more expensive: Carbon dioxide regulations are likely to continue to tighten and pressurize firms in the automotive industry to reduce emissions, resulting in higher costs. One way to lower investment outlays and to drive innovation is to create strategic alliances with other OEMs and preferred suppliers.
These factors have urged firms across the automotive industry to leverage the use of spend analysis solutions. Spend analysis solutions help firms meet the specific needs and requirements of their customers seamlessly while being cost-effective. These solutions also help companies quantify and improve their business decisions which would consequently help them cut down on their maverick spends.
The Business Challenge and Journey
The client, a leading automotive industry player was facing challenges in the standardization of processes, systems, data related to customers, partners, employees, products, and vendors. The data was spread across various systems and there was no proper spend visibility. As a result, the client wanted a common shared-services platform to improve efficiencies and effectiveness of their business while reducing overall costs.
To provide better visibility into the automotive industry client’s procurement data, SpendEdge, tailored a comprehensive research methodology. The research approach comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.
Through the course of this spend analysis engagement, the client gained better spend visibility across commodities, products, services, and suppliers. This helped them reduce costs and strategically improve supplier relationship. The client also enhanced and re-evaluated their purchasing activities and aligned them with their business strategies.
Key questions answered in this spend analysis engagement
The spend analysis engagement helped the client improve procurement efficiency and reduce procurement lead-time with the automation of procurement activities. This helped them overcome their overall spend across business units. Additionally, this engagement assisted the client with easy and quick access to relevant data within the automotive industry through various spend reports.