Category Management Helps a Leading Natural Gas Provider to Increase Focus on Strategic Relationships

Overview of the natural gas industry

The global natural gas industry includes regional markets that are often clustered based on the historical patterns of transoceanic shipping and the primary supra‐regions for natural gas trades. Differences between sub‐regional and inter‐basin markets, or on the other hand, the extent of globalization, fluctuates with the sum total of natural gas transport across geographies.

The key end‐use industry that is driving continued growth in natural gas demand is the electric power industry. In this industry, natural gas has largely replaced oil and now is competing with coal. Furthermore, while gas pipelines will likely continue to increase global gas trade on connectable landmasses, the principal means for gas trade that connects continents, utilizes stranded resources, and supplies island markets are through LNG shipments. These are some of the foundational concepts driving the growth of the global natural gas sectors. 

However, a few factors are expected to impact the growth prospects of the global natural gas industry. One of the many factors include:

• Innovation, optimization, and cost-cutting: A sense of firmness is compelling firms to get costs in line and find new efficiencies within the natural gas industry. Consequently, firms are starting to cut operating and capital budgets, with some reducing workforces and deferring growth plans. However, some of the most significant competencies are resulting from attention to project redesign and technological innovation.

Many such factors are compelling firms in the natural gas industry space to leverage the use of category management solutions. Through effective category management, organizations can build category relationships with customers and boost business performance across units. These solutions also help firms optimize cost structures, efficiency and, the effectiveness of their business.

The Business Challenge and Journey

Client background: The client is one of the first private players to have started supplying CNG (compressed natural gas) and PNG (piped natural gas).

Client issue: With the gradual deregulation and the growing demand for natural gas, all CGD companies initiated aggressive expansion plans, leading to a supply-demand mismatch in corresponding supplier markets. Additionally, retention of suppliers became a concern due to low volumes and reactive procurement practices.

To help the client increase focus on strategic relationships, the category management experts at SpendEdge tailored an all-inclusive research methodology. The research included primary and secondary research coupled with qualitative and quantitative data collection procedures. The experts also collected information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums.

Client journey: The client identified and designated a few high spend categories across materials and services to devise a list of the best practices in category management. Apart from this, the client also identified the strategic and tactical opportunities to create value within the procurement process.

Key questions answered in this category management engagement

The Results

With the help of category management solution offered by SpendEdge, the natural gas provider improved supplier selection decisions and reduced source-to-pay cycle times. Additionally, the client was suggested with improvements to the overall strategic sourcing approach, tendering process, and related tools. This helped them achieve 5% in savings.

To know more about our category management solutions