Overview of the Energy Industry
Supported by high oil prices and the rising demand, the energy industry is facing the need to transform their business models to manage investments and operating costs more effectively. With a radical shift toward a service-driven economy, the energy services providers are relying on IT technologies to improve service effectiveness and enhance their overall efficiency. Amid the ongoing regulatory and environmental changes, energy services providers are focusing on pursuing opportunities to expand in new markets and achieve the economies of scale to remain competitive in the market.
Although companies are facing pressures when it comes to improving their efficiency, achieve greater cost competitiveness, and an outstanding level of environmental performance, the energy services space is confronted with certain challenges. These include:
- The growth of alternative energy sources: With the rising environmental impact of fossil fuels, companies in the energy industry are focusing on sustainable and economically viable sources. In addition, new technologies are beginning to unlock renewable sources such as natural gas, making it a cheap and clean alternative source for
- Rising need to reduce the environmental impact: Since the growing concern for the environment is rising, governments are implementing strict rules and guidelines to encourage the use of alternative sources such as wind, solar, and natural gas to reduce the impact of coal production on the environment. Also, leading energy services providers are facing the need to store carbon dioxide to realize a meaningful reduction in emissions in the environment.
- Increasing energy efficiency: To meet the rising energy demand, energy services providers are facing the need to produce affordable energy to allow the consumers to maintain a comfortable standard of living. In addition, energy services providers are also facing the need to streamline their production capabilities and reduce waste during the supply.
Amid the growing regulatory concerns, energy services providers need to deploy effective measures to gain a competitive advantage and maintain commitment and resolve issues pertaining to the rising energy demand. Additionally, to reduce CO2 emissions and reduce any flaws pertaining to the supply, companies in the energy services space should rely on an efficient solution such as supplier risk analysis.
The Business Challenge
A renowned energy services provider wanted to identify the industry best practices to help organizations reduce vulnerabilities and ensure continuity in their operations. The energy services provider wanted to identify and manage their supplier risks and revisit their risk models to improve their sourcing and procurement functions. In addition, the organization wanted to leverage the use of supplier risk analysis to identify active suppliers and analyze their spend effectively.
The sourcing and procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with leading stakeholders in the energy services space to reduce the risk of supplier failures and improve the continuity in the supply chain. To improve the supplier performance management process, the sourcing and procurement experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, and industry forums.
SpendEdge’s supplier risk analysis solution focused on prominent ways to identify the typical risks associated with the key suppliers and the risks associated with the subsidiaries. In addition, the energy services provider was able to identify the macro and the micro-economic risks and robust mitigation strategies to curtail these associated risks. The solution also helped the energy services provider restructure their financial capabilities and the risks associated with the subsidiaries.
Fundamental questions answered in this supplier risk analysis include:
SpendEdge’s supplier risk analysis solution focused on identifying effective ways to recognize the flaws in the supply chain and devise effective strategies to improve workflows and address risks more quickly, efficiently, and effectively.