Demand Aggregation: How it Helped a Leading Automotive Engine Oil Manufacturer Lower Supply Management TCO
Overview of the automotive engine oil manufacturing industry Automotive engine oil or engine lubricant is any of various substances comprising base oils enhanced with additives, particularly antiwear additive plus detergents, dispersants and viscosity index improvers. Their primary function is to decrease friction and wear and tear of moving parts and also to clean the engine […]
Overview of the automotive engine oil manufacturing industry
Automotive engine oil or engine lubricant is any of various substances comprising base oils enhanced with additives, particularly antiwear additive plus detergents, dispersants and viscosity index improvers. Their primary function is to decrease friction and wear and tear of moving parts and also to clean the engine from sludge. It also aids in neutralizing acids that originate from fuel and oxidation of the lubricant.
Factors such as a rise in the demand for low maintenance, low friction, and fuel-efficient engines from customers will drive the growth of the automotive engine oil market. However, growing demand for electric vehicles and counterfeit lubricants will remain potential threats to the market.
The Business Challenge and Journey
The client, a leading firm in the automotive industry with several engine oil production units spread across the globe, was looking at leveraging SpendEdge’s demand aggregation solution. The client wanted to lower their supply management TCO by carefully monitoring the activities within their supply chain network. Moreover, the client wanted to use demand aggregation strategies to drive savings and offer greater assurance across their supply chain.
The company’s supply chain management executives recognized the tremendous benefits of adopting SpendEdge’s demand aggregation strategies. As such, they were looking at reducing the company’s demand risk profile by improving the efficiency of their overall supply chain operations.
To identify challenges in the supply chain functions, the demand aggregation experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the automotive engine oil manufacturing sector. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.
Why should you leverage demand aggregation?
Procurement teams of organizations that function within large holding businesses or businesses that are frequent acquirers face various system and organizational challenges that make it very problematic to understand and interpret the overall needs and spend of the enterprise.
Demand aggregation plays a crucial role in overcoming this challenge. It involves the process of determining the total demand for goods and services in any industry. It specifies the number of products and services that will be purchased at all possible price levels.
Also, many strategic benefits can be obtained by systematically following this strategy. By gaining a detailed understanding of key material attributes such as grade, specifications, and sourcing market dynamics, stakeholders can identify substantial cost savings opportunities and realize benefits throughout the value chain.
Fundamental questions answered in this demand aggregation study include:
SpendEdge’s demand aggregation solution offered relevant insights that helped the automotive industry client to analyze their spend patterns. It also enabled them to view and interpret all open and new requisitions and then aggregate the demand or spend across those different requisitions. Such an approach helped them to act quickly and increase the efficiency of their sourcing process to drive profitability.
Moreover, this demand aggregation engagement assisted the client to achieve breakthrough improvements in their overall supply chain performance. Furthermore, it offered relevant insights to better understand the market scenario, industry standards, and expectations.
Automobile industry trends:
- Growing demand for synthetic engine oils– Synthetic engine oils offer superior performance and protection when compared to traditional engine oils. Also, synthetic engine oils are manufactured using more advanced refining processes that provide higher quality and purity than conventional oils.
- Use of multigrade oils– The primary reason leading to the demand for multigrade oils is that fact that it is unaffected by external climatic conditions. Multigrade engine oils offer superior performance even in cold weather; thereby, making it compatible for use in different climatic conditions.
- The evolution of biosynthetic technologies– It is now possible to manufacture a new class of bio-based synthetic molecules produced from organic fatty acids found in plant oils. These biosynthetic oils find usage in several industries including chemical, lubricant, and cosmetics.
To know more about our demand aggregation solutions engine oil manufacturers