Overview of the alternative energy industry
Alternative energy sources are free and renewable sources of energy that are low on carbon emissions when compared with conventional sources of energy. They can be defined as any non-traditional energy source that meets the needs of the end-users. Unlike traditional energy sources, alternative energy sources do not make use of fossil fuels. The global alternative energy market is divided into three sub-segments, namely:
- Solar energy
- Wind energy
- Geothermal energy
The growing need for renewable energy sources due to the depletion of fossil fuels is expected to drive the global demand for alternative energy. Also, the rapid advancements in energy storage and distribution technologies will further fuel the market’s growth. Due to such factors, the global alternative energy sector is expected to witness accelerated growth in the foreseeable future.
The Business Challenge and Journey
A leading player in the energy industry was looking at leveraging SpendEdge’s risk analysis solution to identify factors hindering them from accomplishing their business goals. Their inefficient supply chain strategies were also contributing to major losses across the supply chain. As such, they wanted to refine their supply chain strategies to mitigate risks and enhance business growth. The alternative energy client was also looking at reducing the company’s risk profile by improving the efficiency of their overall supply chain operations.
To identify challenges in the supply chain management, the risk analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the energy industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.
Why should you leverage risk analysis?
For any organization, gaining maximum value from the supply chain while meeting the end-users’ demands for sustainability and ethically sourced products is a difficult balance to achieve. To do so, organizations will have to assess their supply chain processes and identify the risks across the supplier network. Our risk analysis solutions help firms in developing and implementing appropriate risk mitigation strategies.
The assessment affects nearly every aspect of an organization including product development, R&D, demand and supply planning, manufacturing, delivery of goods, and customer returns. Moreover, the dynamic nature of supply chains across industries has made risk analysis an essential component of enterprise risk management.
Fundamental questions answered in this risk analysis study include:
With the help of risk analysis solution offered by SpendEdge, the alternative energy provider gained a better understanding of the process of risk discovery. The client was also able to identify and quantify the impact of each risk factor on their overall business growth. Additionally, our risk analysis experts offered recommendations on the ways to categorize risks and prevent the probability of their occurrence.
Moreover, the risk analysis solution enabled the client to achieve breakthrough improvements in their overall supply chain performance. Furthermore, it offered relevant insights to better understand the market scenario, supplier negotiation strategies, industry standards, and expectations.
Alternative energy industry challenges:
- Commercialization– Closely associated with the issue of timing and scalability is commercialization or the question of how far-off a proposed alternative energy source stands from being fully commercialized.
- Substitutability– An ideal alternative energy form would be one which can be directly substituted an existing form without requiring further infrastructural enhancements. However, this is very hard to achieve and is particularly pronounced in the case of the electrification of transportation, such as with electric vehicles.
- Energy density– A major disadvantage of low energy density is that it results in a much greater resource consumption. Several alternative energy storage and distribution technologies are characterized by low energy densities, which means that their deployment will result in higher levels of resource consumption.
To know more about our risk analysis solutions for the energy industry
Overview of the global energy sector
The fourth industrial revolution has been an exciting time, especially for companies in the global energy sector. In 2017, the global energy landscape outgrew the traditional centers of demand and turned its focus to emerging economies. The evolution of IoT, blockchain, and distributed energy systems are some of the significant trends influencing the energy sector. Additionally, smart meters, microgrids, energy management systems, and IP-enabled sensors are just a few more examples of how innovative digital assets have become the “hot trend” in the global energy sector.
However, several factors are affecting the growth prospects of the global energy sector. A few factors include:
- Uncertainties: A major issue facing the energy sector is the mounting uncertainty that complicates the financial feasibility of the major investments required for the development of large conventional and deep-sea oil and gas projects. Moreover, these uncertainties come from the effects on the supply side of tight oil and shale gas production and the factors that affect demand for oil and gas in major importing countries.
- Price volatility: Forecasting oil and gas prices has always been a challenging exercise for energy sector players, but it has gotten even more complicated in the past few years. Earlier, there was a broad consensus of where supply and demand would head, and the industry invested accordingly. However, now, there are several new factors affecting supply and demand.
Many such challenges are compelling firms in the global energy sector to leverage the use of supply chain risk assessment solutions. Supply chain risk assessment solutions help firms prune their supply chain and improve: lead time, transportation risks, customer service, risks associated with profitability, and order-fulfillment times.
The Business Challenge and Journey
Client background: One of the largest energy companies in the world operating in over 100 countries employing more than 50,000 people.
Client issue: The company recognized that there were single points of failure in the onshore and offshore ICT dependencies and infrastructure that could mean a loss of critical services for many weeks. As a result, they wanted to devise recovery strategies and plans to understand the exposures and requirements of the business.
To help the client devise recovery strategies and plans across their business units, the supply chain risk assessment experts at SpendEdge conducted comprehensive research and carried out discussions with prominent stakeholders in the global energy sector.
Client journey: The client undertook a risk assessment study to understand all potential single points of failure and to identify risk controls and solutions that would reduce the likelihood of disruption or minimize the impact. The client also drafted a programme of activity that ensured all pre-incident actions were taken to implement practical solutions, as well as producing comprehensive disaster recovery and business continuity plans detailing all post-incident actions and information to ensure response and recovery would be controlled.
Key questions answered in this supply chain risk assessment engagement
With the help of SpendEdge’s supply chain risk assessment engagement, the energy sector client allocated recovery times to all critical activities, coupled with the identification of all resource requirements and minimum requirements.
To know more about our supply chain risk assessment solutions for energy sector firms
Overview of the alternative energy industry:
Alternative energy sources are renewable sources of energy. It can be defined as any non-traditional source that meets the energy needs of consumers. Also, they do not cause any undesirable changes to the environment. To meet the growing energy needs of the global population, several researchers around the globe are focusing on developing and discovering new alternative energy sources.
Traditional sources of energy include fossil fuels, such as oil and natural gas, whereas alternative energy sources are those that do not require the use of fossil fuels. Although most alternative energy sources are considered renewable, a few are non-renewable. Alternative energy sources used for generating electricity include solar energy, wind energy, and geothermal energy sources. However, the leading alternative energy source for transportation fuel is biofuels, with ethanol leading the market.
The different sources of alternative energy include:
- Solar Energy
- Hydroelectric Energy
- Biomass Energy
- Wind Energy
- Tidal Power
- Geothermal Energy
The Business Challenge and Journey
The client, a leading player in the energy industry, specializing in the alternative energy segment was looking at leveraging SpendEdge’s cost analysis solution. The client wanted a detailed outline of the potential risks and gains in the alternative energy industry.
The company’s supply chain management executives recognized the tremendous benefits of leveraging SpendEdge’s cost analysis solution. As such, they were developing the lowest possible cost mix using our cost analysis solution. Moreover, the client wanted to gain detailed insights and recommendations that will help them achieve the lowest possible cost mix.
To identify challenges in supply chain functions, the cost analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the alternative energy industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.
Fundamental questions answered in this cost model analysis study include:
SpendEdge’s cost analysis solution offered relevant insights that helped the alternative energy industry client in identifying the essential cost elements across their supply chain. Moreover, with the help of our cost analysis solution the alternative energy firm was able to determine the ability of their current cost model and tools to meet stakeholder’s needs for calculating and comparing financial data across their business segments.
Why should you leverage cost analysis?
Cost analysis is a practical approach to evaluate the strengths and weaknesses related to organizational spend. It helps in determining the best approach to achieve maximum benefits while improving overall savings.
Alternative energy industry trends:
- Growth of the electric vehicles market– The electric vehicles market is growing rapidly across economies. The drop in battery costs and affordability are driving the widespread use of electric vehicles. This enables the development of new energy stability solutions, including wind-solar hybrid generation, grid management using utility scale batteries, and plausible alternative power storage options such as pumped hydro or a gas grid to create an adequate balancing mechanism.
- Change in primary energy demand– An unprecedented drop in the cost of clean energy production has occurred in the last couple of years. Solar energy and wind power generation have undergone an annual average percentage drop in the cost of production. Moreover, owing to the affordability, use cases of alternative energy have broadened. Alongside electricity production, it is also offering new and enhanced solutions for mobility and energy security worldwide.
To know more about our cost analysis solution solutions for the alternative energy sector firms
Overview of the natural gas industry
The global natural gas industry includes regional markets that are often clustered based on the historical patterns of transoceanic shipping and the primary supra‐regions for natural gas trades. Differences between sub‐regional and inter‐basin markets, or on the other hand, the extent of globalization, fluctuates with the sum total of natural gas transport across geographies.
The key end‐use industry that is driving continued growth in natural gas demand is the electric power industry. In this industry, natural gas has largely replaced oil and now is competing with coal. Furthermore, while gas pipelines will likely continue to increase global 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 some of the foundational concepts driving the growth of the global natural gas sectors.
However, a few factors are expected to impact the growth prospects of the global natural gas industry. One of the many factors include:
- Innovation, optimization, and cost-cutting: A sense of firmness is compelling firms to get costs in line and find new efficiencies within the natural gas industry. Consequently, firms are starting to cut operating and capital budgets, with some reducing workforces and deferring growth plans. However, some of the most significant competencies are resulting from attention to project redesign and technological innovation.
Many such factors are compelling firms in the natural gas industry space to leverage the use of category management solutions. Through effective category management, organizations can build category relationships with customers and boost business performance across units. These solutions also help firms optimize cost structures, efficiency and, the effectiveness of their business.
The Business Challenge and Journey
Client background: The client, a pioneer in the city gas distribution (CGD) business across the globe, one of the first private players to have started supplying CNG (compressed natural gas) and PNG (piped natural gas).
Client issue: With the gradual deregulation and the growing demand for natural gas, all CGD companies initiated aggressive expansion plans, leading to a supply-demand mismatch in corresponding supplier markets. Additionally, retention of suppliers became a concern due to low volumes and reactive procurement practices.
To help the client increase focus on strategic relationships, the category management experts at SpendEdge tailored an all-inclusive research methodology. The research included primary and secondary research coupled with qualitative and quantitative data collection procedures. The experts also collected information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums.
Client journey: The client identified and designated a few high spend categories across materials and services to devise a list of the best practices in category management. Apart from this, the client also identified the strategic and tactical opportunities to create value within the procurement process.
Key questions answered in this category management engagement
With the help of category management solution offered by SpendEdge, the natural gas provider improved supplier selection decisions and reduced source-to-pay cycle times. Additionally, the client was suggested with improvements to the overall strategic sourcing approach, tendering process, and related tools. This helped them achieve 5% in savings.
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The Business Challenge
The client, a leading supplier in the oil and gas industry, was looking at improving their overall business efficiency. The oil and gas industry player sought to address issues pertaining to regulatory compliance through organized demand planning and optimization of inventory. The firm was also looking at maintaining oil and gas equipment uptime to improve their overall productivity.
The company’s sourcing executives recognized the tremendous scope for streamlining their supply chain processes to achieve cost savings in indirect and direct spend. As such, the oil and gas industry player was looking at reducing their overall procurement cost. With the aim of implementing procurement best practices, the oil and gas supplier approached the experts at SpendEdge to help them implement strategies to enhance their supply chain performance and adhere to the procurement best practices.
To identify challenges in the supply chain activities, the oil and gas industry experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the petroleum industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, oil and gas industry forums to identify the procurement best practices for this industry.
In the oil and natural gas industry, the effective management of purchasing and supply plays a vital role. The procurement managers need to have excellent people skills, commercial and business skills, and the ability to communicate appropriately at all levels of the supply chain. As organizations in the oil and gas industry struggle to streamline their business processes, it becomes essential for them to invest in devising and implementing procurement best practices.
SpendEdge’s procurement best practices engagement offered insights that helped the oil and gas industry player to improve their sourcing practices. Moreover, the client was able to streamline their supply chain activities to drive profitability. It also assisted them in identifying areas of unmanaged indirect spend. This procurement best practices engagement also helped the oil and gas industry player to avoid the risks and threats associated with indirect spend.
Oil and Gas Industry Trends
Overview of the Solar Energy Industry
Solar energy is an efficient form of unconventional energy and a convenient renewable energy source to reduce greenhouse emissions and global warming.
Globally, the demand for solar energy is driven by an increase in environmental pollution and the provision of government incentives and tax rebates. Also, the decrease in water footprint associated with solar energy systems has fueled their demand in power generation sectors. Also, the demand for solar cells has increased drastically owing to a surge in rooftop installations, followed by an increase in applications in the architectural sector. Moreover, the demand for solar power towers and parabolic troughs for electricity generation is expected to fuel the demand for concentrated solar power systems.
However, our analysis of the latest trends affecting the renewable energy sector shows that the solar energy providers are facing challenges in terms of:
Oversupply: As solar energy installations began to grow across the globe, providers typically rush to produce materials and panels that are needed to generate renewable electricity. Even with record growth in the industry, the entry of new solar energy suppliers has created a situation of oversupply. Since the supply is so much higher than the demand, many of these companies have gone out of business.
Inefficiency: Although the cost of solar power has decreased over the years, it’s still an expensive investment, considering its inefficiency. This issue is mainly because most solar panels are stationary and can’t move to meet the sun’s direct rays.
To counter such challenges, renewable energy suppliers are optimizing their supply chain and cutting down on operating costs. With the aid of supply chain analysis, renewable energy suppliers can map out specific activities within the generic value chain activities and look for ways to create efficiencies. Supply chain analysis also helps companies capture the competitive advantage and increases their overall profit.
The Business Challenge and Journey
Client background: The client is a $2 billion-plus company specializing in advanced solar technology and distributed solar power systems. They wanted to streamline supply chain and logistics operations and identify the best third-party logistics (3PL) provider to manage their growing logistics operations in Asia-Pacific.
Client issue: The client’s existing logistics process was complicated due to the presence of numerous entities at various stages of the supply chain. Also, the lack of a central control tower impacted coordination and time management. As a result, they wanted to reduce average logistics spend per project by 25% and increase customer satisfaction with the improved quality of service.
To help the solar energy provider identify the ideal logistics approach, the supply chain analysis experts at SpendEdge, conducted a comprehensive research and carried out discussions with prominent suppliers of solar energy. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to help the client find the right third-party logistics provider.
Client journey: During the course of this supply chain analysis engagement, the solar energy provider was able to identify the ideal logistics approach to select the right third-party logistics provider. Also, the client was able to devise a sophisticated, uniform reporting tool that allowed them to control the supply chain and reduce logistics spends.
Key questions answered in this supply chain analysis engagement
With the help of this supply chain analysis engagement, the client realized a reduction of about $5.5 million on its estimated spend of $25 million for logistics. The client not only achieved savings but also improved its policies and processes across business units.
To know more about how our supply chain analysis solutions can help renewable energy suppliers
Overview of the Hydro Energy Industry
The global hydro energy industry has started experiencing a resurgence, following years of stagnation and bad press. Technologies with lower environmental impact, such as small hydro, run-of-river, and low head turbines have proven to be extremely popular, even to the critics of hydro energy. Moreover, there has been an upsurge in pumped storage projects as standalone options. However, innovation in the sector has been lacking and has mainly been in the use of computation for diagnosis, monitoring, and control of plants.
Let’s look at a few key factors that are expected to influence the growth forecasts of the hydro energy industry in the coming years.
- Increasing customer expectations: Prominent hydro energy companies are facing relentless pressures to maintain a secure, reliable, and affordable supply to the customers as the demand for energy services is spurring significantly. Also, with customer expectations increasing, leading companies are facing the need to switch the suppliers frequently to meet the rising demands of the individuals.
- Increasing competition: Today, with the entry of prominent global leaders, the hydro energy industry is witnessing an increase in the level of competition, as the new entrants are attempting to gain a significant share of the market space. Additionally, the shift toward renewable sources of energy is resulting in the entry of a higher number of competitors; thereby, affecting the current supply landscape.
Many such factors are compelling companies in the hydro energy space to leverage the use of supply chain analysis solutions. Supply chain analysis solutions help firms facilitate better controls of procurement spends and compliance monitoring. These solutions also help companies develop an end-to-end follow-up procedure to resolve any discrepancies in the supply chain.
The Business Challenge and Journey
The client, a leading hydro energy provider, had developed an extremely complex, global production and distribution network with multiple storage locations and various modes of transportation for delivering their offering to customers. As a result, they wanted to get a better handle on its logistics and distribution network.
To help the client enhance operations and increase reliability, SpendEdge’s supply chain analysis experts developed a robust market research approach. The research included primary and secondary research coupled with qualitative and quantitative data collection methodology.
During the course of this supply chain analysis engagement, the hydro energy provider designed a strategic blueprint of the future supply in six key areas: sales and customer service, operations, planning, supply chain network, organization structure, performance management; and IT. The client was also able to set up a hierarchy of key performance indicators that aligned with their business goals.
Key questions answered in this supply chain analysis engagement
SpendEdge’s supply chain analysis engagement helped the hydro energy client identify numerous improvement opportunities at the functional level, as well as within each SBU. Furthermore, the recommended strategy blueprint resulted in improved service levels, streamlined planning and operations processes, enhanced operations, and increased reliability.
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Overview of the Renewable Energy Industry
The renewable energy industry at large comprises of energy sources including wind, hydroelectric, solar, and liquid bio-fuels. Today, organizations within the renewable energy space are investing heavily in R&D to meet the growing demands for cost-effective and environment-friendly energy sources despite the availability of fossil fuels. Apart from the regulatory government support, the growth of renewable energy industry is also marked by the growing concern to minimize the steadfastness of fossil fuels for energy consumption.
However, several factors are expected to disrupt the growth of this sector. The factors include:
- Increasing competition: With the entry of global leaders, the renewable industry is witnessing an increasing level of competition with new entrants attempting to gain a major segment of the industry by providing cost-effective solutions. Additionally, the shift from monopoly to a more competitive environment is opening up the space for new market entrants in this sector.
- Increasing customer expectations: Today, renewable energy providers across the globe are facing relentless pressures to maintain an affordable, reliable, and secure supply to the customers owing to the increase in the demand for renewable energy services. As a result, leading companies are facing the need to switch suppliers frequently to meet the demand of the customers while being cost-effective.
Many such factors are forcing companies to leverage the use of spend management solutions. Spend management solutions help companies implement best-in-class procurement platform to enable strategic sourcing, manage contracts, suppliers and increase compliance. These solutions also help firms accomplish a competitive edge over the peers operating in the industry space by assisting them to reduce maverick spends across their business units.
The Business Challenge and Journey
The client, a leading renewable energy provider with business operation spread across the globe, wanted to develop a bespoke spend analysis platform to reduce the time taken for their sourcing and procurement activities. With the help of spend management solution, the client also wanted to implement a procurement platform to enable strategic sourcing, increase compliance, and manage contracts and suppliers across their business units.
The spend management experts at SpendEdge developed a robust market research approach. The research included primary and secondary research coupled with qualitative and quantitative data collection methodology to help the client gain better insights into their purchasing activities.
During the course of this spend management engagement, the renewable energy provider developed a customized spend analysis platform and made full use of the internal data for improving their management skills and procurement expertise. Additionally, the client was able to implement a strategic sourcing roadmap to drive significant savings in a short time and achieve corporate goals.
Fundamental questions answered in this spend management study include
With the help of the spend management engagement, the client reduced their operating costs for analysis and reports, which meant the enterprise was getting significantly more business value for less investment. This helped them generate savings of over 3 million dollars.