A leading media and entertainment industry client wanted to compare and benchmark the industry’s compliance requirements, structure, industry standards, and processes to the external practices of the peers within the specific market segment. The media and entertainment industry client was also looking at formulating a prioritized list of improvement opportunities to justify their budgetary decisions.
The client approached SpendEdge to develop an comprehensive approach that would help them develop an appropriate best practices model. During the course of this engagement, a detailed quantitative analysis of various supply chain categories was carried out to help the client identify the industry best practices.
About the Client
The client – a leading media and entertainment industry client with an annual income of over USD 10 billion.
The media and entertainment industry player was facing predicaments in creating a prioritized list of improvement opportunities and identifying the timeline for integrating the improvements, which, in turn, posed several other difficulties in justifying their overall budgetary decisions.
How did SpendEdge Help the Client?
Step 1: Identification of the key structure, performance, and effectiveness metrics
This step revolved around the identification of the key performance metrics, industry standards, and effectiveness metrics. As the objective was to devise a suitable industry benchmarking best practices model, the collected information was analyzed to identify the benchmarks.
Step 2: Selecting the target organizations of the desired size to benchmark
Post the conclusion of the data collection and analyzation phase of the industry benchmarking process, it is essential for companies to identify and refine the peer companies to summarize the findings and opportunities based on the data.
Key questions answered in this case study
Benefits of the Engagement
The best practices experts at SpendEdge recommended a robust benchmarking model to help the client validate their budgetary decisions. The model also allowed the media and entertainment industry client to effectively compare their standards with that of the peers and subsequently devise a robust industry benchmarking strategy.
Why industry benchmarking best practices?
Industry benchmarking best practices primarily deals with the process of comparing an organization’s compliance factors and processes to the external practices of the peers and the industry. Industry benchmarking best practices also helps in the process of making a judgment about the effectiveness of an organization’s compliance program.
Devising an effective industry benchmarking best practices model can help companies stay abreast of the competition and evaluate the benchmarks periodically. Industry benchmarking best practices can further enhance the category growth across the supply network by examining peer group data to identify and implement best-in-class organizational improvements.
To know more about our industry benchmarking best practices for media and entertainment industry
Overview of the Electronic Components Market
The world around us is constantly transforming, thanks to the rapid development of modern technologies. The rate of change and advancement in electronics is startling to be modest. If you look back a decade, you’ll notice how far we’ve come in terms of electronics making groundbreaking strides in various industries. In the midst of such rapid developments, maintaining profitability, market share, and leadership becomes a major concern for the manufacturers of electronic components.
To survive, companies in the electronic components market must be as flexible as they are quick.
However, just being flexible isn’t enough for companies looking to dethrone the current heavyweights in the market. The supply market today is extremely competitive, and to stay a step ahead, companies in the electronic components market must learn to adapt to uncertainties in demand and short product lifecycles. In addition, the emergence and acceptance of regulations and standards that compel companies to focus on Corporate Social Responsibility (CSR) will force companies to keep tabs on the amount of e-waste generated by them.
The Business Challenge and Journey
Client background: A fortune 500 multinational corporation, the client is engaged in producing a multitude of products in the electronic components market. Headquartered in the United States, the company employs over 30,000 employees while providing services to customers in over 40 countries.
- Client issue: The largest challenge to overcome was ensuring that the correct hardware was purchased from the best quality source while still achieving the lowest price possible and guaranteeing the quickest delivery time.
- Client journey: The client identified global suppliers by measuring the quality, price point, and delivery time of the part suppliers. They also implemented industry best practices across the supply chain to manage and provide: parts forecasting, contract administration, global fulfillment, small parts sourcing and other direct material procurement, product quality engineering, product returns, value product engineering, logistics, and program management.
Research methodology: To help the client in ensuring that the correct hardware was purchased from the best quality source while still achieving the lowest price possible, the strategic sourcing experts at SpendEdge devised an integrated research approach. The approach included primary research methodology coupled with qualitative and quantitative data collection methodologies. The experts also congregated information from a wide array of secondary sources such as paid, company presentations, industry forums, and industry database within the ICT industry space.
Key questions answered in this strategic sourcing engagement include:
The electronic components manufacturer managed USD $50 million in spend. Additionally, they delivered continual cost reduction from 2% to 10% annually and oversaw and managed over 30,000 part numbers.
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Overview of the global IT services industry
The global IT services market holds substantial opportunities for industry players due to increasing IT spending in the retail, healthcare, and transportation sectors. The increasing global demand for systems, services, software, and rising IT spending by governments are likely to boost the IT services market. The industry is highly associated with economic cycles as IT services are project-based and often represent discretionary spending. Apart from the conventional factors, the growing need to push companies to outsource their IT requirements is also predicted to spur the growth prospects of the IT services sector.
However, our analysis of the global ICT industry shows that IT services providers are expected to face challenges in terms of:
- Rising consumer demands: Today’s consumers are technologically driven and are not confined to less updated technologies. Therefore, prominent IT services providers must ensure that the requirements of the customers are met through customization and other relevant product offerings.
- Cyber threats: Today, organizations are inundated with data – with the rising volume of data, players in the IT service space have become the victims of various security breaches. Therefore, it becomes mandatory for the companies to streamline their efficiency and improve security in their operations.
To overcome these challenges, bridge demand-supply concerns, and meet the rising needs of the customers, organizations are facing the need for robust supplier profiling solutions. Supplier profiling solution helps firms engage with suppliers and deliver high-quality service while enhancing their economic opportunities.
The Business Challenge and Journey
Client background: An IT services major with over 15 business units spread across the globe wanted to better understand the latest ICT industry trends and identify the key suppliers.
Client issue: The company had a robust internal team that was experienced in make-versus-buy analysis but lacked an important ingredient – the capability to combine human intelligence and technology to effectively identify contract manufacturers globally at the onset of any assessment.
To help the client select the right contract manufacturing partner, SpendEdge’s supplier profiling experts followed a scrupulous research methodology and carried out discussions with prominent stakeholders in the ICT industry space. The experts also compiled information from a wide array of exclusive sources such as paid industry catalogs, company exhibits, and industry forums.
Client journey: With the help of SpendEdge’s supplier profiling engagement, the IT services provider identified the existing supplier base of contract manufacturers globally and conducted an in-depth analysis of the top contract manufacturers. The client also ensured that all proposed collaborations would seamlessly fit with their existing strategy. Furthermore, they identified areas of improvement in terms of process, output, and automation.
Key questions answered in this supplier profiling engagement
The IT services industry client conducted multiple make-versus-buy analysis for different categories and geographies simultaneously. This helped them improve time-to-market delivery of their offerings.
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Overview of the integrated circuit manufacturing space
An integrated circuit, or IC, is a semiconductor wafer with millions of capacitors, resistors, and transistors fabricated on them. It finds usage as an oscillator, amplifier, counter, timer, and microprocessor. Also, depending on the intended application an integrated circuit can be classified as an analog integrated circuit or digital integrated circuit.
Globally the integrated circuit industry is expected to witness accelerated growth in the coming years owing to the rise in the use of the analog IC’s in various end-use verticals such as consumer electronic devices, automotive utilities, LED lighting, healthcare devices, and driver assistance systems. Other factors such as technological proliferation in consumer electronics devices and the high penetration of smartphones, tablets, and feature phones have augmented the demand for such integrated circuit components.
The Business Challenge and Journey
The client, a leading player in the ICT industry, was looking at leveraging SpendEdge’s supply chain risk analysis solution to identify and prevent the losses occurring due to the risks in their supply chain. The client was facing several issues related to their inefficient supply chain strategies. The company’s supply chain management executives recognized the tremendous benefits of implementing a supply chain risk analysis study. As such, they were 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 functions, the supply chain risk analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the ICT 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 supply chain risk analysis?
Implementing an effective supply chain risk assessment can help break down organizational silos. It also guides the management to develop a more strategic path to prevent disruption and avoid risks.
The assessment process 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 supply chain risk analysis an essential component of enterprise risk management.
Fundamental questions answered in this supply chain risk analysis study include:
SpendEdge’s supply chain risk analysis solution offered relevant insights that helped the integrated circuit manufacturer to develop a robust risk management strategy.
Our solution also enabled the client to identify, adapt, and implement the best practices that produced the best performance results in the integrated circuit manufacturing sector. Moreover, the supply chain 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.
Integrated circuit market drivers:
- Automotive electronics– The growing popularity of in-vehicle infotainment, assisted and autonomous driving features, and connectivity are expected to fuel the demand for automotive integrated circuit. Devices such as analog devices, mixed-signal devices, and MCUs will continue to represent the major share of automotive IC sales.
- Smartphones and personal computing systems– Smartphones are the fastest-growing segment of the cellphone market. Also, the demand for 4G and 5G devices with virtual reality features will impact the sales of analog, digital signal processing devices, NAND flash memory, and logic integrated circuit devices.
- Wearable electronic devices– The increased use of semiconductors in wearable electronic devices such as health monitors and fitness trackers are significant contributors impacting the growth of the integrated circuit market.
The emergence of advanced fabrication and new product development techniques that decrease the costs per unit of the component while increasing their functionality are expected to drive the growth of integrated circuit market over the next decade. Also, the dynamic nature of this sector has further shortened the product life cycles; thereby, enhancing demand across industries.
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Overview of the Printing Services Industry
Globally, the demand for printing services is based on the need for magazines, printed books, newspapers and print advertising. The printing services industry is affected by the transition from print to advertising and online media. In addition, printing services companies, publishers, and graphic designers are increasingly performing services in-house; thereby, heightening external competition for the industry. While financial conditions are expected to improve, generating increased demand for print-based advertising, the continued transition to digital media is expected to hinder the industry’s growth.
Let’s take a look at a few factors influencing the growth of the industry.
- Digital substitution: Today, printing services providers have been forced to deal with the impact of electronic media and other technological changes owing to digitization. Moreover, digital magazines for tablet computers and smartphones have also cut into traditional revenue sources for the printing services industry.
- Postal Rates: Postage increases have made it costlier for publishers and marketers to mail advertising circulars to potential customers. As a result, printing services providers have started facing challenges when it comes to regulating the costs.
Many such factors are compelling firms in the printing service space to leverage the use of spend analysis solutions.
The Business Challenge and Journey
The client, a leading printing services provider with business units spread across the globe, wanted to streamline their logistics chain as they were facing predicaments in reducing the cost of their sourcing and procurement processes. Additionally, the client was also facing challenges in operational functions, which restricted them from increasing efficiency and streamlining their supply functions. As a result, they wanted to identify an automated sourcing and procurement solution that would help them organize the entire process.
SpendEdge’s spend analysis specialists tailored an integrated two-step research methodology, which included qualitative and quantitative data collection methods to help the client formulate an efficient cost-to-serve model. The specialists also collected information from a wide array of reliable sources trade shows, industry forums, and company presentations in the printing services space.
During the course of this spend analysis engagement, the printing services provider was able to devise robust built-in category-specific dynamic pricing structures that helped them in assessing the trade-off decisions between quality and price. The client also identified the areas for process improvements and cost reductions by gaining real-time insights into their procurement activities and expenditures.
Key questions answered in this spend analysis engagement
The spend analysis engagement helped the client identify the best-in-class suppliers in the printing services space which, in turn, helped them significantly cut down the prices on high quantity products. Furthermore, the client captured the data and formulated an efficient cost-to-serve model with the desired outcome for quality offerings.
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Overview of the IT Industry
Globally, the rising spend on IT across prominent sectors such as the healthcare, retail, and transportation is stimulating the growth of the global IT industry. IT solutions help businesses create, manage, and optimize information efficiently. The growth of the sector can be attributed to factors such as government-backed reforms and significant investments in IT. In this age of technology disruption, prominent companies are facing increasing pressure to redefine their technical capabilities and improve the time-to-market for the products and services. Although the IT industry is witnessing promising growth, several factors that may curtail the growth of the industry include:
- Security threats: With the increase in innovations, technology not only plays a pivotal role in bringing about a digital transformation but also has an adverse effect on the security. Therefore, it becomes important for businesses to efficiently monitor their technology and prevent the outbreak of any security threats. Also, organizations should ensure to implement better cybersecurity measures to improve their service architecture and eliminate security threats.
- Regulatory environment: Technology companies generally face a host of regulatory challenges in terms of privacy and data sovereignty. With the implementation of stringent regulatory policies, businesses are facing challenges when it comes to handling data sets while reducing any chances of catastrophes. Moreover, organizations should also ensure that they provide end-to-end protection while handling the data.
To address such challenges and better analyze cost factors involved in the process, organizations are opting for cost model analysis. Cost model analysis helps IT solutions providers to calculate and compare their financial information and point out gaps to bridge the uptake of cost. Moreover, cost model analysis also helps IT solutions providers to effectively allocate their resources to meet the business objectives.
The Business Challenge and Our Journey
The client, a prominent IT solutions provider, wanted to identify the cost elements and assess the impact of each cost driver on the overall costs. With the help of a cost analysis solution, the client wanted to identify the direct and indirect costs, intangible costs, opportunity costs, and the cost of potential risks. The primary objective of the engagement was to compare the aggregate costs of the services and determine if the benefits outweigh the costs. In addition, the IT solutions provider also wanted to compare the outsourcing options with in-house capabilities.
To efficiently devise a quantitative cost modeling solution, the procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the IT industry. Additionally, the experts also compiled information from reliable sources such as trade shows, paid industry databases, and company presentations.
The cost analysis solution offered by SpendEdge helped the IT solutions provider negotiate levers adopted by suppliers to ensure low-cost raw material sourcing. The client was also able to achieve the lowest cost mix and create a scenario-based cost modeling solution. Moreover, SpendEdge’s cost analysis solution also assisted the IT solutions provider to collect the supply market pricing data and the cost movement scenario for all the cost elements.
Fundamental questions answered in this cost model analysis include:
During the course of the engagement, the IT solutions provider was able to determine the fair market pricing while negotiating with the vendors. The engagement also helped the client negotiate with the suppliers to ensure maximum profitability. Furthermore, the engagement also helped the IT solutions provider improve service value while increasing the overall profit margins.
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Overview of the Global IT industry
Globally, digital disruption has forced IT companies to enhance their technological capabilities and improve the time to market for their service offerings. Therefore, to stay competitive in the market, leading businesses have been compelled to improve pricing models and M&A strategies to transform their operations and business models. The industry comprises of services that enable IT companies to create, manage, optimize, and access information. The growth of the IT industry can be attributed to factors such as government reforms to increase the spending on technology and rising opportunities in the IT sector. Although the IT industry is witnessing promising growth, some factors that may curtail the growth of the industry include:
- Human resources: As budgets become tighter and workloads increase, several IT companies have started facing challenges when it comes to hiring more employees. Due to the presence of numerous players, IT companies have started worrying about retaining their employees as the chances of attrition levels are higher. Moreover, IT companies are also facing the need to invest highly in human resources to cater to the rising demands of the target audience.
- Innovations: With the advent of new technologies, prominent IT companies have started facing the need to reinvent themselves and stay relevant in the market space. Moreover, it becomes essential for the IT companies to invest highly in research and development to ensure their presence in the IT industry.
To address such challenges and analyze the spending patterns, leading IT companies are adopting spend analysis solutions. A spend analysis solution helps businesses effectively monitor and keep track of their spend and gain better visibility into the spend performance. Furthermore, with the help of such solutions, IT companies can efficiently manage their organizational spend and identify critical savings opportunities to reduce maverick spend.
The Business Challenge and Our Journey
The client, a renowned IT company, wanted to gain an understanding of the current state of spend and the spending patterns in the organization. A prominent IT company wanted to manage their organizational spend and identify critical saving opportunities. Moreover, with the help of spend analysis solution, the IT company wanted to track the fluctuating commodity prices based on underlying cost drivers and their prices.
To identify the potential bottlenecks in the IT industry, the procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with leading stakeholders in the IT industry. Furthermore, the experts also compiled information from a wide array of reliable sources such as paid industry databases, company presentations, and trade shows.
The spend analysis solution offered by SpendEdge helped the IT company compare their spend with that of the competitors. The client was able to identify the potential bottlenecks in terms of savings leak and purchasing overlaps and make accurate and confident decisions. Moreover, the solution also sought ways to discover and control maverick spend and identify and prioritize saving opportunities.
Fundamental questions answered in this spend analysis solution include:
The spend analysis solution offered by SpendEdge helped the client devise a short-term and medium-term spend strategy and improve the overall process efficiency. In addition, the engagement also helped the client in the IT industry access and organize spend data and develop robust sourcing, budgeting, and product strategies.
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Overview of the Information Technology Services Industry
The global IT (information technology) services industry includes services related to the application of technical and business expertise that enables organizations to create, optimize, manage, and access information and business processes. The information technology services industry’s scope includes product support services such as software and hardware maintenance and professional services such as IT consulting and integration services. The increasing global demand for systems, software, and services, as well as IT spending by governments, and banking and financial sectors are likely to spur the growth of the information technology services industry.
However, a few factors are expected to influence the growth of the information technology services industry. These factors include:
- Planning and risk management: To stay efficient and effective across the information technology services industry, timely assessments are needed. These modifications are in response to changes in the market including global sourcing, new product launches, credit availability and the requirement to protect intellectual property. Moreover, these risks must be identified and quantified to control and mitigate.
- Supplier relationship management: It is essential to create, comprehend and follow mutually agreed upon standards to better understand the current performance and opportunities for improvement. Moreover, having two different methods for communicating and measuring performance results in a waste of time and effort.
Many such factors are compelling information technology services industry firms to leverage the use of supply chain management solutions.
The Business Challenge and Journey
The client, a leading information technology services provider with business units spread across the globe was facing challenges in the overall supply chain visibility and performance measurement. Additionally, they had complex relationships with shipping lines and freight forwarders. The client also had a lack of unified procedures across product groups.
To help the client achieve a stable operating platform, the supply chain management specialists at SpendEdge developed a robust market research approach. The analysis included primary and secondary research coupled with qualitative and quantitative data collection methodology.
During the course of this engagement, the information technology services provider was able to devise an innovative, international supply chain with a stable operating platform. This helped them streamline operations, eliminate original bill of ladings, and the letters of credits. Additionally, the client selected carriers with reliable services and implemented carrier performance measurements.
Key questions answered in this supply chain management engagement
With the help of this supply chain management engagement, the client was able to implement a more sophisticated reporting tool for their sourcing and procurement processes. Additionally, the client was able to select carriers for major trade lanes based on three criterias: fast transit time, reliable service and reasonable price.