Spend Analysis Aids a Leading Automotive OEM Parts Manufacturer to Visualize Data & Make Better Sourcing & Supplier Decisions
Overview of the Automotive OEM Parts Industry: The automotive OEM parts sector is an important segment of the automotive industry. The OEM parts sector has a tremendous growth opportunity mainly due to the increasing demand for passenger vehicles owing to the high disposable incomes and easy finance schemes across emerging economies. This, as well as […]READ MORE >>
Overview of the Automotive OEM Parts Industry:
The automotive OEM parts sector is an important segment of the automotive industry. The OEM parts sector has a tremendous growth opportunity mainly due to the increasing demand for passenger vehicles owing to the high disposable incomes and easy finance schemes across emerging economies. This, as well as the growth of the aftermarket service segment, will fuel the growth of the OEM parts sector.
The Business Challenge and Journey:
The client, a leading automotive OEM parts manufacturer, was looking at leveraging SpendEdge’s spend analysis solution. The client was facing several issues in analyzing their spending patterns to identify bottlenecks and increase opportunities for long-term savings. Also, the instability in their supply chain resulted in an increase in their maverick spend and risks while conducting business operations.
The company’s supply chain management executives recognized the tremendous benefts of adopting the best practices in spend analysis to minimize their maverick spend. As such, they were looking at reducing the company’s risk profile by implementing a centralized supply chain governance system. Spend analysis forms an essential part of a supply chain network and ensures that the risks are identified and mitigated to deliver financial goals.
To identify challenges in the supply chain functions, the spend analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the OEM parts 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 spend analysis?
In today’s economy, spend analysis is gaining respect as a potent weapon in the battle to squeeze new savings out of the procurement processes of various business segments. Spend analysis enables organizations to reduce inventory, improve sourcing cycle time, and assists in long-term planning and economic forecasting. It also provides a realistic picture of future spend requirements based on the forecasted data.
Fundamental questions answered in this spend analysis study include:
SpendEdge’s spend analysis solutions offered relevant insights that helped the automotive OEM parts manufacturer to identify the potential bottlenecks in the supply chain. Using real-time data and analytics, the OEM parts manufacturer was able to gain detailed insights to save money and enhance business efficiency. Moreover, the spend analysis solution offered helped the client aggregate and visualize data to make better sourcing and supplier decisions. It also led to improvements in compliance, reduced cycle times, and uncovered maverick spend.
Future challenges and opportunities:
- Diverging markets: There is a high potential for portfolio mismatch, as smaller segments in the automotive industry are growing more strongly than others. The automotive OEM’s need to prepare for the Chinese aftersales market, which is expected to grow at an estimated 20 percent per year.
- Digital demands: Digital channels have become the primary information sources for end-users of any serviced. This creates several growth opportunities for automotive OEM’s but is also signifies potential threat of competition from online retailers and puts pressure on the existing dealership structure.
- Shifting industry landscape: As several automotive OEMs are implementing alternative powertrain technologies, suppliers will have to provide value-added services to cater to the needs of end-users. Moreover, OEM’s in the automotive industry will have to ensure that the suppliers’ production footprints especially in emerging, match future market demands and their production plans.
Such factors indicate the necessity for defining appropriate strategies in the automotive OEM segment, to tackle risks arising from the overarching challenges. Market penetration and pricing scenarios need to be modeled and understood for the adoption of new features and to offer a wide range of services to its customers.
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