CASE STUDY

Category Management Helps a Natural Gas Industry Client Reduce Source-To-Pay Cycle Times

Dec 22, 2017

Overview of the Oil and Gas Industry

The global natural gas industry comprises of regional markets that are often grouped based on the historical patterns of transoceanic shipping or the primary supra?regions for natural gas trades. Distinctions between inter?basin and sub?regional markets, or on the other hand the extent of globalization, differ with the amount of natural gas transport across the globe. 

The key end?use sector that is driving continued growth in natural gas demand is the electric power sector, in which natural gas is largely replaced oil and is successfully competing with coal. Moreover, while gas pipelines will likely continue to increase worldwide 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 foundational concepts driving the growth of today’s global natural gas industry.  

Let’s take a look at one of the critical factor that is expected to influence the growth prospects of the natural gas industry in the coming years.

  • Cost Cutting, Optimization, and Innovation: Within the natural gas industry, a sense of firmness is compelling firms to get costs in line and find new efficiencies. As a result, firms are starting to cut capital and operating budgets, with some reducing workforces and deferring growth plans. However, some of the biggest competences are resulting from attention to technological innovation and project redesign

As a result of these types of challenges, firms operating in the natural gas industry space are leveraging the use of category management solutions. The category management solutions help firms in this space to optimize cost structures, efficiency and, the effectiveness of businesses. request free proposalThese solutions also help companies build category relationships with customers and boost business performance across business units.

The Business Challenge and Journey

The client, a leading natural gas industry client was facing supply-demand mismatch in supplier markets. Also, retention of suppliers became a concern due to low volumes and reactive procurement practices.

To help the client advocate best practices in category management, the experts at SpendEdge tailored a comprehensive research methodology. The research approach comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.

During the course of this category management engagement, the natural gas industry client was able to select the high spend categories across services and materials to implement the best practices in category management. The client also identified the right strategies and tools that could address business imperatives tied to the categories. Furthermore, they identified strategic sourcing, supplier relationship management and procurement transformation as strategic opportunities for value creation within the procurement function.

Key questions answered in this category management engagement

The Results

With the help of this category management engagement, the client improved supplier selection decisions and reduced source-to-pay cycle times, resulting in additional 3% savings.

To know more about our category management solutions

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