CASE STUDY

Increasing Local Procurement by 28% for a Company in the Metals and Mining Industry – A Case Study by SpendEdge

Jan 9, 2020

European Metals and Mining Industry Outlook

Metals and mining companies operating Europe are set to remain in recovery mode as a sluggish recovery in mineral prices keep investment activity subdued. Companies must remain cautious and focus on improving balance sheets to protect themselves from potential price volatility. Sourcing locally and developing the local supply base could be an effective way for companies to increase the security of supply, reduce costs, minimize lead times, and gain more favorable negotiations on accessing resources. Also, they could improve access to capital and provide more competitive access to inputs.

Business Challenges Faced 

The client, a leading European company in the metals and mining industry wanted to buy more locally manufactured goods that could match the cost, quality and delivery time expectations while investing in sustainable economic growth. However, the company felt the need to address current barriers to local procurement in host countries. Local suppliers lacked the necessary capabilities and the client required suppliers with sufficient capacity to meet their procurement needs. Also, it was highlighted that procuring specialized equipment was significantly more difficult in-country and finding goods manufactured locally a challenge. 

Inability to devise local procurement strategies can cost metals and mining companies in terms of revenues and flexibility. Request a free proposal to access our tailor-made procurement market intelligence solutions.

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Our Research Approach 

To help the client address the gaps and barriers to local procurement, the experts provided supplier insights to create a local supplier database for the tendering process. They recommended breaking up bids to increase access to local suppliers. They embedded supplier development in the tender process by including key performance indicators in their contracts and tracked the spend of suppliers locally.

Moreover, to drive local manufacturing, the experts identified potential markets for certain products. They analyzed factors influencing the client to buy locally. These factors could be broadly classified into themes such as:

  • proactive economic
  • proactive social
  • reactive economic
  • reactive social

Based on the themes, the experts provided insights that helped the client to devise local procurement strategies and gain a competitive advantage over other metals and mining companies. They created multiple smaller contracts for operations such as transport and trucking and dissipated risks across the supply chain.

Engagement Outcome 

The comprehensive analysis of the European metals and mining industry helped the client to address the information gap. A successful strategy was devised to help the client undertake supplier development initiatives and identify opportunities. The solution offered increased local procurement by 28%, thereby improving flexibility, increasing revenues, and reducing supply chain costs.

Gaining accurate supply market insights and engaging with potential suppliers is crucial for companies in the metals and mining industry to better control the supply chain. Request a free demo to access our web-based procurement platform and gain reports across 100+ categories. 

Benefits of Local Procurement in the Metals and Mining Industry 

  • Local suppliers in the metals and mining industry are typically more reactive and deliver products more quickly.
  • It allows companies to address any concerns and ensure that quality standards are met.
  • Localizing the supply chain reduces the logistics costs, thereby slashing the supply chain costs.
  • Keeping a fast-paced supply chain attracts new customers and facilitates more revenues.

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