CASE STUDY

Reducing Inventory Costs by 40% by Accurately Predicting Demand for a Company in the European Steel Industry

Nov 12, 2019

European Steel Industry Outlook

The European steel industry has long held a strategic place in the economy, fostering innovation, employment, and growth. However, the uncertainty surrounding the EU steel market in terms of demand and supply fundamental due to slowing global economic momentum has led to the weakening of the EU economy. Companies are compelled to formulate best procurement practices and supply chain strategies to confront these challenges and return to pre-crisis production levels. 

Business Challenges Faced

The client, one of the largest firms in the European steel industry was facing significant losses due to overproduction and slump in demand. They wanted to focus on asset utilization to minimize their losses. However, this required revamping their supply chains in a manner that could reduce operating costs. Also, it required synchronization of procurement, logistics, and production schedules with dynamic demand forecasts. The client, therefore, approached SpendEdge to gain a comprehensive overview of the changing market scenarios in Europe and streamline their disparate enterprise functions to enhance business agility.

Inability to gain market insights can result in overproduction and financial losses for companies. Request a free proposal to access our tailor-made solutions and European steel industry statistics. 

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Our Research Approach 

To cater to the specific needs of the client, the supply chain experts at SpendEdge carried out a detailed European steel industry analysis. They generated actionable insights around crucial aspects of the supply chain to help the client identify process-related bottlenecks, reduce purchasing and supplier management costs, and optimize the procurement process.

The solution offered covered the issues that were driving the costs such as the price of raw materials, cost structure of suppliers, and the global economic outlook. It also delivered insights into the spot market and contract market apart from price variation in each market. This enabled the client to optimize their steel spend and optimize allocation. Also, the report provided helped the client to re-allocate processing to low-cost producers in the value chain and evaluate options of buying from different plants from the same supplier and different suppliers. This assisted the client to devise effective strategies and increase competition in the European steel market.

Engagement Outcome

SpendEdge’s accurate demand forecasts empowered the client to optimize functions such as forecast-to-stock, order-to-cash, procure-to-pay, prepare effective production schedules, and optimize inventory levels to significantly lower operating costs. This helped the client to reduce inventory costs by 40% and maximize output with integrated sales production, and procurement. The report offered also enabled the client to take real-time decisions and adapt quickly to the changing European steel industry.

Predicting demand accurately is crucial for companies in the European steel industry to improve the procurement process. Request free access to our web-based procurement platform to keep up with the latest market insights. 

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