CASE STUDY

Helping a Canadian Tire Manufacturer to Reduce Production and Distribution Costs by 40%

Sep 9, 2019

Canadian Tire Industry Overview

Despite exhibiting growth over five years, volatile input prices coupled with pressure from imports have placed significant downward pressure on the performance of the tire industry in Canada. The need to improve fuel efficiency and safety has increased demand for more advanced tire technology. Also, demand for tires is expected to stagnate as new vehicle production slows and companies must find ways to manage raw material costs. 

Business Challenges Faced

The client, a leading company in the Canadian tire industry, was facing numerous challenges on different fronts such as production, sales, and market competition. This included decreasing per year sales, increasing part worn sales, expanding factory warehouse direct volumes, growing raw materials costs and higher distribution costs. Therefore, they decided to collaborate with SpendEdge to achieve financial and environmental savings without compromising on service. Also, they wanted detailed insights into customer data and vehicle data to improve their process efficiency.

Inability to perform tire industry analysis and achieve financial savings can impact the process efficiency for tire manufacturers. Request a free proposal and our experts will get back to you asap.  

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Our Research Approach

Leveraging their scales and depth of experience, the experts at SpendEdge carried out a comprehensive tire industry analysis and offered a spend analysis and price forecasting solution. This helped the client to develop a short and medium-term spend strategy and identify the possibility of improving savings. They identified the commodities such as rubber content and steel cord that were the key drivers for the company. Instead of analyzing the pricing landscape in Canada, the experts analyzed price trends and fluctuations at the global level and determined the potential impact on costs of raw material sourcing.

Furthermore, to address the increased use of part worn sales, they identified markets where the legislation laws were strict regarding the same. They focused more on labeling the tires correctly and promoting them based on their quality. While working, our experts also realized that the client wasn’t data-savvy enough and lacked accurate customer data, sell-in data, sell-out data, and vehicle data. Therefore, they communicated with CPOs and developed business case and procurement roadmap to improve process efficiency and realize cost savings from purchases.

Engagement Outcome

SpendEdge’s customized tire industry report helped the client to source rubber and steel cord at best prices and reduce the production and distribution costs by 40%. This helped the client to focus more on the labeling of products. The procurement roadmap developed helped the client to better comprehend price fluctuations and demand. Our experts also helped the client to develop a robust pricing structure while maintaining quality service levels.

Developing a robust pricing strategy requires companies to comprehend price fluctuations. Request a free demo to access our web-based procurement platform and gain detailed pricing insights.  

Tire Industry Trends to Watch Out for in 2019 and Beyond

Electric vehicles: The increasing use of electric vehicles and Germany’s initiative to ban internal combustion engines by 2030 is expected to drive the popularity of electric vehicles. Companies in the tire industry will now have to focus on higher torque and increased load demands due to heavier batteries.

Autonomous vehicles: The introduction of level 4 and 5 autonomous vehicles will alter the driving patters and will require different tire assessments. Tire manufacturers will have to improve durability, rolling resistance, and handling requirements of products. 

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