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Recommending the Lowest Cost Mix for a Leading Auto Manufacturer – A SpendEdge Case Study

Engagement Overview:

A leading player in the auto industry wanted to build a comprehensive list of all cost factors and their associated benefits across the supply chain network. To do so, and identify the lowest cost mix, the auto industry client approached SpendEdge to devise a comprehensive approach that would help them develop an appropriate cost model. A detailed quantitative analysis of various spend categories within the supply chain was carried out to identify the lowest cost mix would help them improve spend efficiency.

About the Client:

The client is a leading player in the auto industry, specializing in the manufacturing of auto parts.request proposal

Business Challenge:

The auto industry firm was facing several financial challenges as a result of which they were looking at leveraging cost model analysis to identify the lowest cost mix and develop a model that reflects their organizational structure.

How did SpendEdge Help the Client?

  • Step 1: Gathered and filtered raw data into distinct categories

The first step revolved around the process of gathering raw spend data from across the supply network. As the objective was to devise a suitable cost model, the collected data was segmented into various spend categories to distinguish its source.

  • Step 2: Identification of cost drivers for each of the spend categories

Once the data is segmented into categories, it is essential to gain a detailed understanding of the driver behind each category. A detailed correlation analysis helped the client to determine the relationship between input factors and cost drivers, which further assisted them by offering an intuition on the best suitable cost model.

  • Step 3: Identification of price forecasting trends in the auto industry that need to be integrated into the final cost modeling approach

To devise an effective pricing model, it is essential to differentiate variable cost factors from the ones that more or less remain constant over a certain period. Also, the implementation of price forecasting trends into the final model helps auto manufacturers to develop a robust cost model that keeps track of the fluctuations in prices of raw materials.

Key questions answered in this cost model analysis engagement include:

Auto industry

Benefits of the Engagement:

The cost model analysis experts at SpendEdge recommended the lowest cost mix that helped the auto manufacturer to develop a robust cost model. The developed model enabled the auto industry player to effectively map the financial relationship between their spend categories and other factors within the organization. This relationship further helped them reveal the entities that drove the cost of other entities and those to which cost was passed.

Why incorporate cost model analysis?

Cost model analysis is a key factor that promotes cost control and cost containment. It enables organizations to stay well-informed via precise cost reporting, forecasting of future costs, and enhancement of pricing strategies.

Cost model analysis also enables auto manufacturers to develop winning sourcing strategies for current spend and helps determine when and where to seek alternative supply options and materials. It is equally important to the planning and development stages of new product portfolios.

Our Findings:

The auto industry is an ever-evolving sector where cutting-edge cost models are introduced to the market on a regular basis. Although the industry is currently experiencing accelerated growth, the auto manufacturers are facing a continuous challenge owing to the adoption of incessant innovation in order to excel in the market. Therefore, devising an effective cost model can help them drive category growth across the supply network by analyzing historic spend data to identify key cost factors and develop a forecasting model to predict future costs. 

To know more about our spend analysis solutions for food and beverage industry players

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Supplier Risk Analysis: How SpendEdge Helped a Prominent Auto Accessories Manufacturer Improve Supply Chain Efficiency

Overview of the Automotive Industry

As sales continue to shift and environmental regulations tighten, the global automotive industry is relying on innovations to improve product offerings and enhance operational efficiency. Amid the recent economic crisis, the industry has witnessed a considerable growth with the rising investments in emission reduction technology and autonomous vehicles. The growth of the auto accessories space can be characterized by the rising per capita income levels and the burgeoning middle-class population in the emerging economies. Moreover, as the demand for new automobile increases, prominent players are necessitating the need for more automotive components from industry operators.

While the automotive industry experts are optimistic about the growth of the auto accessories space, there are several factors that may influence the growth of this sector:

  • Intense competition: With the presence of numerous OEMs, the auto accessories space is witnessing a robust competition. To keep pace with the rising competition, prominent players in the auto accessories space should rely on innovations to improve the production capability, encourage lean manufacturing, and enhance quality improvement. Also, the growing demand for customization is compelling auto accessories players to streamline their operations and meet the relentless consumer demands.
  • Digital transformation: The recent study estimates that nearly15%of the global revenue will be generated online. This can have a greater impact on R&D, procurement, assembly, and marketing of auto accessories. Hence, it becomes essential for the businesses to shift toward digitization such as on-demand mobility services and data-driven

To identify the potential market opportunities and curtail the risks in the supply chain, prominent businesses are leveraging supplier risk analysis solution.request free proposal

The Business Challenge and the Journey

The client, a renowned auto accessories manufacturer wanted to identify, assess, and mitigate risk in the supply chain process. With the help of industry best practices, the client wanted to reduce vulnerability and ensure continuity by profiling the most suitable suppliers. The client wanted to evaluate each supplier through an initial segmentation analysis and further develop mitigation strategies to curtail risks.

To understand the potential risks and make informed business decisions, the supplier risk analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the auto accessories space. To gain more timely and accurate view of the supplier performance, the experts collated information from sources ranging from industry forums, magazines, and trade shows.

SpendEdge’s supply risk analysis solution helped the auto accessories manufacturer mitigate supply chain risks and improve collaboration with the trading partners. The client was able to continuously monitor the suppliers to protect the business from financial and operational risks. The solution also helped the client include risk management and due diligence as a part of their entire source-to-settle process.

Fundamental questions answered in this supplier risk analysis solution include:

Sp- risk analysis

The Result

The engagement offered by SpendEdge helped the auto accessories manufacturer manage risk throughout the lifecycle of the supplier. The solution helped the client certify suppliers, monitor external and internal levers, and successfully deliver the products and services. Furthermore, the solution also helped the client increase efficiency, maintain compliance, and gain better visibility into the actions.

To know more about our supplier risk analysis solutions

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SpendEdge’s Supplier Profiling Helps a Renowned Auto Manufacturer Analyze their Supplier Performance

Overview of the Automotive Industry

In Europe, the automotive industry accounts for 12 million jobs; 8 million jobs in the US and more than 5 million jobs in Japan.

Following the recent economic crisis, the global automotive industry is in a challenging phase with the presence of numerous OEM players offering a considerable number of product offerings. The growth of the industry can be attributed to factors such as the rise of per capita income, global consumer spending, and finance rates. Moreover, the industry is vulnerable to economic shifts with the driving demand for automobile sales in the next five years. As sales shift to continue and environment regulations tighten, leading auto manufacturers are planning to deploy appropriate investments and resources to enhance their business objectives.

Here are some prominent factors that may influence the growth of the industry:

  • Complexity and cost pressure: With the stringent regulatory pressures, leading auto manufacturers are planning to invest highly in research and development to offer reliable solutions to the customers. Moreover, with the growing concern for carbon emissions, businesses are planning to offer reliable solutions to better match the demands of the customers.
  • Digital demands: The present consumers are more connected and are focusing on ease of use in their product offerings. With the relatively growing demand for convenience in their product offerings, prominent organizations are planning to leverage the use of digital resources to increase their product portfolios.

To counter these challenges and meet the supply-demand relationships of the customers, leading organizations are leveraging supplier profiling solutions.request free proposal

The Business Challenge and Our Journey

The client, a prominent auto manufacturer with a considerable number of manufacturing units, spread globally, wanted to reduce procurement and excess inventory costs and deliver quality in the products offered. With the growing supply-demand gap, the client wanted to leverage the use of supplier profiling to reduce the time span for the products and improve the supply chain efficiency. The primary objective of the client was to identify the right supplier from a pool of suppliers and improve the quality of products offered while enhancing economic opportunities. Moreover, the supplier profiling analysis also aims at engaging with the best suppliers and comparing the business efficiency with their competitors.

To profile the most suitable suppliers in the auto manufacturers space, SpendEdge’s supplier profiling experts carried out an extensive research methodology comprising interviews and discussions with prominent stakeholders in the auto manufacturers space. To streamline their supply chain efficiency, the experts also compiled information across a wide array of reliable sources such as paid industry databases, trade shows, and company presentations in auto manufacturers space.

The supplier profiling solution offered by Infiniti helped the prominent auto manufacturer identify and develop a long list of suppliers in terms of their efficiency and revenue. Moreover, through a reliable solution, the client was able to efficiently manage and control their maverick spend and measure and optimize their supplier performance. The supplier profiling solutions also sought ways for the auto manufacturer to segment suppliers based on spend and criticality and evaluate the suppliers in terms of their potential risks.

Fundamental questions answered in this supplier profiling solutions Include:

Supplier profiling

The Results

During the course of the engagement, the supplier profiling solution helped the prominent client develop a SWOT analysis and manage supplier activities based on the criticality of the sourcing complexity. The solution also helped the client gain a performance perspective on various factors ranging from the price, quality, delivery, and management.

To know more about our supplier profiling solutions in the auto manufacturers space

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