CASE STUDY

SpendEdge’s Supply Market Analysis Solution Helped a Premium Automobile Company to Balance Between Tier -1 and Tier-2 Suppliers

Dec 24, 2019

Swedish Automobile Industry Overview

The automobile industry in Sweden generates about a million jobs and accounts for over 10 percent of the country’s total export. Sweden offers a good market for high-quality and technically sophisticated automotive products. Customers are very safety conscious and manufacturers are known to follow high safety standards. In regard to the aftermarket, there is a growing need for properly-equipped auto shops and new technology that can meet the demand for repair and maintenance. Also, it is important for companies to focus on knowledge-based partnerships and innovation processes to devise strategies to secure and develop their position as one of the world’s leading automotive firms.

Business Challenges Faced

A Swedish premium automobile company, with over 20,000 employees worldwide wanted to analyze the market and find suitable suppliers to source from. The supply market for test equipment of new technologies, similar to electrified vehicles, autonomous drive, and connected cars, was becoming challenging for the client to understand. The number of actors entering the market is highly dynamic when compared to other supply markets in the industry. The client, therefore, collaborated with SpendEdge to perform supply market analysis for the test equipment of a specific new technology and devise a competitive sourcing strategy.

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Our Research Approach

To cater to the specific requirements of the client, our experts analyzed the existing supply market. They gained specific insights into the key market players and their role in the market. In the next step, characteristics of products to be sourced were studied. Material costs, direct labor costs, overhead costs and profits were analyzed to perform cost-price analysis and understand what profit-margin is reasonable for the product. The experts then analyzed supplier competition and buyer competition to identify prominent suppliers on the market. Value-adding activities were defined to understand the supply chain. While performing supply market analysis, the experts also analyzed new geographical markets and possible product supplements or substitutes.

This helped the client to identify ways to secure the supply of the test equipment. Insights gained helped the client to develop effective sourcing strategies depending upon the product’s level of competitiveness and the strategic importance of the competence to the firm. Based on our experts’ recommendation, they established partnerships with several Tier-2 suppliers to pool complimentary skills.

Engagement Outcome

The supply market analysis carried out by our experts helped the client to adapt the test equipment to suit their testing activities and control the product quality. The client was able to balance between Tier -1 and Tier-2 suppliers and reduce the risk of paying higher. Partnerships like this eased new product development and helped the client share risks and costs.

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