CASE STUDY

Minimizing Requesting Budget Estimates by 30% and Improving the Supply Process for a Natural Gas Company in the US

Nov 29, 2019

US Natural Gas Industry Overview

The US natural gas industry is witnessing a surge in production. The shale revolution started in 2008 has not just transformed the domestic energy outlook but also energy markets around the world. However, the price collapse from 2014 to 2017 has forced companies in the US natural gas industry to cut costs to survive. They are looking for ways to reduce dependence on riskier suppliers and identify strategic suppliers to ensure sooth supply process. 

Business Challenges Faced 

Rising competition in the US natural gas industry has pushed procurement teams for price reduction from suppliers. The client, a specialist subcontractor was facing heavy price competition in their established markets. They were looking to expand their value chain. As a part of company strategy, they started tendering for EPC projects. However, they failed to acquire the projects. A lack of control over subcontractors was considered as the prime reason for difficulties with the project supply. High proposal price variations and virtually no compliance to the requirements in the RFQs were few other factors contributing to the failure. The client, therefore, felt the need to collaborate with SpendEdge to address issues in the supply process.  

Inability to gain supplier insights can impact the supply process for companies in the natural gas industry. Request a free proposal to access our tailor-made solutions and US natural gas industry statistics. 

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Our Research Approach 

The experts at SpendEdge performed a comprehensive natural gas industry analysis to address the requirements of the client. This provided insights into the industry best practices and showed that main contractors were gaining contracts at better prices. The client on the other hand had no established relationships with strategic suppliers, thereby resulting in higher prices and lower quality procurement scopes.

The team then recommended supply of strategic and bottleneck items by building supplier relationships. They provided insights into potential suppliers and their cost structures. This enabled the client to aggregate purchases across the entire portfolio and gain bigger volume discounts. Onerous terms were avoided from contracts on price or other purchasing terms and the key areas were identified where the company and suppliers could cooperate to realize joint savings. A joint action plan including negotiations with their largest suppliers and running a sourcing program for the largest and most expensive categories was developed to renegotiate important contracts.

Engagement Outcome

Engaging with suppliers helped the company to secure supply in the natural gas industry. This minimized requesting budget estimates by 30%. Insights gained also helped the client to strive for highest possible quality in RFQs, tailor these towards supplier core competencies, and win 5 contracts in a span of one month.  

Identifying strategic suppliers is crucial for companies in the US natural gas industry to improve the contracting process. Request free access to our web-based procurement platform to keep up with the latest market insights. 

Factors Influencing the Natural Gas Industry Growth

natural gas

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