decentralized procurement Archives

3 Procurement Trends That Can Change the Dynamics of the Mining Industry in 2019

Today commodities are moving back broadly into the global market balance but the challenges for the mining industry are far from over. In a world of more complex ore bodies, deeper mines, social and geopolitical risks, growing energy costs, resource nationalism and lack of infrastructure, global mining industry remains under exceptional pressure to control costs, boost efficiency and improve safety performance.

Rising cost is a cause of concern for the mining industry as the strategies of mining companies depend heavily on the current state of the market. Also, the rise in cost is resulting in the declining quality of ore and limited accessibility of new deposits. This will squeeze the supply in the years to come, potentially driving a commodity-price rebound as the global demand continues to rise. So, the companies need to analyze the new procurement trends in the mining industry that can offer exceptional opportunities for efficiency gains and can help in controlling costs as well.

At SpendEdge, we understand the impact that rapidly changing procurement trends can have on your mining business. And to help companies in the global mining industry to reposition their portfolios and excel in the competitive landscape, our team of experts has highlighted three procurement trends that have the potential to change the complete dynamics of the mining industry in 2019.

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Buyers Efforts to Curtail Emissions Driving the Growth in the Global Mechanical Seals Market

London, Mar 06, 2018: Increasing demand for high-quality seals that contribute to buyers’ efforts in curtailing emissions and growing focus of regulatory bodies on reducing the impact of emissions on the environment have driven the growth in the mechanical seals market. Additionally, growing demand from the pharmaceutical sector owing to emergence and adoption of bioprocess drugs is also driving the market growth.

SpendEdge’s latest procurement research report on the global mechanical seals market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the components and spares, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“The market for mechanical seals is obtaining demand from new end-user industries such as nuclear and renewable energy. The nuclear energy sector may decline over time owing to high negative environmental impact; however, the criticality of emission regulations for nuclear power generation is anticipated to spur new product development” – Bhuvaneshwari Udayakumar, components and spares expert at SpendEdge.

Due to a wide range of seals available in the market, buyers find it challenging to select a final product and often end up selecting a wrong product only to find incompatibility after its use. This eventually increases spend on mechanical seals by buyers. As a result, buyers are facing procurement challenges in selecting correct mechanical seals as per their requirement.

Need more insights on this report?

This procurement report on the mechanical seals market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Get access to our reports to gain insights, platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now

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Increasing Consumption of Alcoholic Beverages Driving the Demand for Glass Bottles and Containers

London, Feb 27, 2018: Increasing consumption of alcoholic beverages such as wine and beer across the globe, especially in regions such as APAC and South America, consequently contributes to the demand for glass bottles and containers for packaging, as they facilitate high designing capabilities for the buyers. Additionally, the rise in demand from the cosmetics and perfumes industry is also driving the demand in the global glass bottles and containers market.

SpendEdge’s latest procurement research report on the global glass bottles and containers market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the packaging and labeling, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“Glass bottles and containers are one the most preferred materials for packaging across end-user industries as they are 100% recyclable. The growing stringency of regulations in packaging from regulatory bodies has shifted the focus of buyers towards glass bottles and containers as a packaging option.” – Bhuvaneshwari Udayakumar, packaging and labeling expert at SpendEdge.

Buyers in the industry face challenges with standardization of products in terms of quality across their production hubs due to variance in raw materials and cullet quality and testing capability of the personnel. As a result, buyers face procurement challenge in labeling and packaging of substances. Also, improper quality of bottles and containers may affect the shelf life of product stored and lead to losses for buyers.

Need more insights on this report?

This procurement report on the glass bottles and containers market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Biggest Challenges Faced by Procurement Professionals in Indirect Spend Management

Most companies often focus their efforts on direct spend categories and place a low level of importance on indirect spend. However, indirect spend can make up a high proportion of third-party spend in most companies. Often overlooked, indirect spend management is gaining attention due to its ability to derive more value from their supplier spend and further increase savings. Indirect spend management is not so straightforward and easy. Managing IT, MRO, logistics, utility, and travel requires a different kind of skillset and expertise from the procurement teams. If procurement teams are able to manage and take control over the indirect spend effectively, they can create more savings opportunities. So what are the barriers procurement professionals need to overcome to unlock new savings opportunities?

Controlling maverick spends

Maverick spends are purchases made outside of agreed contracts. Companies make many purchases out of their agreed contracts due to various reasons and circumstances. However, it can be detrimental to the organization as no contract means no legal protection and it can also impact the profit and contract fulfillment. Unmanaged spends can account for billions of dollars of ineffective and inefficient purchases in a large enterprise. Additionally, it also makes the organization vulnerable to procurement frauds. A major problem faced by the procurement professionals is the implementation of control measures to eliminate such maverick spends. Organizations struggle to regulate such spends as employees usually try to be efficient by using a ‘just get things done’ attitude. Also, procurement professionals often bypass the contracting system as it is laborious and time-consuming. At an age where agility is necessary, they cannot afford to waste time in excessive documentation. Additionally, sometimes employees can feel that they can find a better deal elsewhere than in the contract offers. It is essential to review HR policies and educate stakeholders of the detriments of unmanaged spend. A review of the P2P process and a proper spend analysis are also essential to put a stop to such maverick spends.

Lack of centralized control

A common misconception outsiders have about the organization is that it sees the company as a single entity. The truth is far from that, as they function with multiple departments with decentralized control. The problem with such decentralized control is that, when implementing indirect spend management, professionals often lack the knowledge of the scale of diversity within their organization. Each department is provided with their own budgets, and have measures and regulations to spend the budget where they need it. This again gives rise to maverick spends and purchases that are not centralized. Therefore, it becomes problematic to assess who is spending on what. To get on top of the indirect spend management, organizations should centralize their purchasing operations. It will not only help achieve economies of scale but also allow greater scrutiny of suppliers and their contracts. Additionally, it eliminates the practices of offering contracts based on each department’s convenience and ensures qualified suppliers are selected. Apart from its contribution in cost-savings, it also affects the non-price factors such as risk management, CSR initiatives, and supplier diversity.

To tackle the challenges arising out of indirect spend management, companies have turned towards automated procure-to-pay (P2P) processes. Such processes eliminate process errors, increase visibility of payments, and provide better control over indirect spend. Additionally, eProcurement, eInvoicing, AP, order lifecycle management, electronic payments, and supplier management are some tools used by the organization to increase visibility and control over their indirect spend management.

For more information on challenges in indirect spend management, maverick spends, and unmanaged spends:

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Recent Developments in the Global Agrochemicals Market

In modern farming, agrochemicals are extensively used to neutralize the soil, enhance crop yield, protect crops against pests, and increase plant growth. Various types of agrochemicals are available in the market including herbicides, insecticides, fungicides, and seed treatment chemicals. The first uses of agrochemicals can be traced back to 4500 years when Sumerians used sulfur compounds as insecticides. The demand for agrochemicals is on the rise as the availability of arable land is limited to feed the growing world population. Suitable agrochemicals are thereby used to maximize the use of agricultural land. The recent procurement market intelligence report from SpendEdge on the global agrochemicals market estimates the market to be worth $52.2 billion.

Trends in the agrochemical market

Increase in restructuring efforts

There is an increasing trend of restructuring efforts in the agrochemical market as leading players strive to obtain the market leader position and expand their product portfolio. The restructuring efforts have also been helped by increasing regulatory complexity, low ROI on R&D investment, and tough market conditions. For instance, market leaders, Dow Chemicals, and DuPont announced their merger in 2015 and completed the activity in 2017. The combined entity would create an agribusiness portfolio that is worth more than US$17 billion. It also helps the buyers in the market as they can purchase all their requirements from one single vendor.

Development of insect-control traits

One of the major concern for agrochemical manufacturers is developing chemicals which effectively tackle insects and other pests, so they cant damage the crop. The agrochemical market is experiencing a renewed interest in insect-control traits as they are researching on new compounds, screening and testing these for active ingredients, and developing them in conjunction with other substances, to make them more viable. For instance, in September 2016, DuPont Pioneer researchers discovered a protein from a non-bacillus thuringiensis bacterium source, which demonstrated an alternative method for controlling corn rootworm in North America and Europe. This can effectively save millions of corn crops that cause significant economic loss to the farmers.

Adoption of precision farming

As farmers face difficulty growing certain types of crops in a given condition with limited resources, it becomes important that scarce natural resources are effectively used to produce more using less. The rapid development of technology in agriculture has resulted in the adoption of various new agricultural practices such as precision farming, stereoscopic agriculture, and ecological agriculture. Among these methods, precision farming is expected to gain prominence as it helps farmers in cultivating crops in all types of soil environments. The advent of GPS and GNSS enables farmers to locate their precise position in a field to create maps to measure variables such as crop yield, terrain, topography, organic matter content, nitrogen levels, and moisture levels.

New regulations

Although agrochemicals play a vital role in increasing the crop yield, it presents its set of side-effects and can sometimes be harmful to the humans or the environment. As a result, government bodies place regulations in the manufacturing and use of such agrochemical. Currently, however, the market has seen an increase in regulations that can significantly hamper the introduction of new products as well as increase the costs of developing an agrochemical. For instance, in 2016, EFSA announced neonicotinoid assessments to be reviewed at the beginning of 2017. France in June 2016 announced that neonicotinoid insecticides would be banned from 2018. This is because the chemical is highly toxic to the bee population as it impacts their ability to forage, learn and remember navigation routes to and from food sources.

Read more about the trends in the agrochemicals market along with supply market insights, procurement best practices, category management, and pricing insights in SpendEdge’s upcoming report on the global agrochemicals market.

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High demand for high-oleic sunflower oil from F&B industry in the global sunflower market

London, Jan 22, 2018: Growing economies such as India and China are expected to drive the growth in the consumption of sunflower oil market over the next decade. The drive in the consumption of sunflower oil can also be attributed to changing dietary habits and increasing per capita consumption of processed food items in these countries.

SpendEdge’s latest procurement research report on the global sunflower oil market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the agro commodities and raw materials portfolio, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“High-oleic sunflower oil improves shelf life for baked food products and makes them resistant to oxidation. Brands in the F&B industry are increasingly demanding sunflower oil as this property translates into high-cost savings, especially for high-heat applications.” – A. Kowshik, agro commodities and raw materials procurement research specialist at SpendEdge.

Sunflower oil’s sourcing and production processes are such that there are high chances of the oil getting adulterated or losing purity. As a result, seeds sourced should be inspected for quality and stored as per quality standard guidelines to prevent the risk of getting infected by fungus. Buyers in the sunflower oil market are facing sourcing challenges in order to obtain pure and unadulterated sunflower oil.

Need more insights on this report?

This procurement report on the sunflower oil market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Our Insights platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now

Top 5 Things Every Manager Must Know About Tail Spend

Typically in each organization the 80/20 rule governs that the highest spend category absorbs 80% of the cost and 20% of the cost is absorbed by tail spends. Going by the same rule, a majority of the organizations that are looking for procurement efficiency have possibly already optimized 80% of the spend, leaving only the remaining 20% to be optimized. But in reality, even 20% of such spend is still a lot. Aditionally, such tail spends include spend categories with possibility of higher savings rate. Here are the top 5 things you need to know about tail spend:

Tail Spend Matters
Revisiting the 80/20 rule, most organizations direct their resources in negotiating with suppliers whom they spend the most on; thereby, giving little importance to savings from the suppliers making up the tail end. Consequently, the tail end suppliers face fewer cost pressures and command higher margins, giving rise to significant cost saving opportunities.

Big Suppliers can be a Part of the Tail Spend
The belief that tail spend consists of small suppliers is a common misconception among businesses. Although this case stands true most of the time, there can also be large suppliers down there. Businesses should realize that large suppliers may be supplying small amounts, contributing to the tail. Managers can take measures to increase savings by using sophisticated procurement technology that enables them to streamline and consolidate the spend and get better value out of such suppliers.

Tail Spend is Decentralized
Unlike strategic procurement, tail spend is consumed by all departments such as finance, marketing, legal, and IT within the organization. Procurement teams have always faced challenges in maintaining policies and control to bring order to such decentralized spending, which can be solved by a neat tail spend programme.

Better Compliance, Risk Management, and Savings
The pressure on the organization to improve compliance has been increasing year-on-year. Handling multiple suppliers and multiple spend category calls for multiple contracts and increased documentation costs. Running a tail spend programme provides not only better control over suppliers but also reduces the procurement costs. Additionally, using procure-to-pay processes minimizes the transaction costs and increases the compliance efficiency.

Supplier Rationalization
Various tail spend programs can effectively reduce the supplier base by combining all low-value orders across an organization. Reducing the number of supplier results in lowered transaction cost and processing cost. Companies are now looking to reduce the supplier base by using prime contractors by forcing all small suppliers to work through larger primes on a category or a geographic basis.

For more information on tail spend and how your organization can achieve increased cost savings:

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Exploring Hidden Opportunities in Your Indirect Spend

On the very surface, costing may look like a straightforward equation, but it is challenging to figure out where most of the company’s money is going. Managers are always eager to know the figure spent on critical suppliers to make a difference in supply chain negotiations. In the process, they seem to ignore the indirect costs, which can sometimes account for the majority of an organization’s expenses. Since individual business units handle indirect spend, procurement professionals have little visibility on the spend patterns of such units. Indirect spends are estimated to account for about 15% of the organization’s total cost with the possibility of a higher procurement waste.

Here are some of the ways to bring different areas of indirect spend under procurement function:

Digitization of the Procurement Process
A modern solution to take control of indirect spend would be to use digital technologies to monitor the indirect spend. However, merely collecting the information is not sufficient. The managers should be constantly analyzing to explore cost-saving opportunities and check for areas of improvement to optimize the spend. A significant amount of money can be saved by using analytics tools that analyze in-depth spending patterns and service delivery.

Choosing Preferred Suppliers
Today, businesses rely on a vast network of geographically dispersed supplier to fulfill their demands, making the vendor selection process a complicated affair. On top of that, it is essential to maintain a healthy relationship with all key suppliers. One key strategy used to curb the indirect spends would be to minimize maverick spends by renegotiating contracts with key suppliers in each category of top spend areas. Additionally, it is possible to gain leverage on pricing by pooling in smaller spends into a fund with fewer suppliers.

Outsourcing the Procurement Process
Considering the pace at which businesses are growing today, it can be notoriously difficult to contain costs regarding procurement and vendor management. In addition to that, companies also must worry about compliance and governance. A majority of the companies are looking to outsource the procurement process to gain control of their indirect spends. Outsourcing the non-core process of indirect spend not only ensures better performance and value improvement but also enables the organization to free up resource bandwidth and use it towards strategic activities.

For more information on how your organization can manage and control indirect spend:

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Top 10 Procurement Trends for 2017

To view an updated version of this blog, visit: https://www.spendedge.com/blogs/top-10-procurement-trends-2018

Procurement is quickly evolving in response to changes and advancements in technology, personnel and hiring requirements, consumer demands and concerns, and business practices. Here are our top ten procurement trends that are set to bring on transformation in the near future:

Big data will become a bigger part of procurement and will help facilitate procurement decisions, form processes, and choose suitable procurement solutions. Additionally, big data and artificial intelligence will work together to revolutionize the speed and overall efficiency of the supply chain and procurement processes. The use of machine learning algorithms in conjunction with big data will result in time and money savings for companies

Decentralized buying will continue to decline while more companies will adopt and establish procurement departments to improve their spending decisions and profits. More companies will begin to prioritize relationships with suppliers and contractors and embrace the procurement process as a whole more efficiently and enthusiastically

Agility of procurement processes will increase as a result of technological advances and as a result of improved relationships between suppliers and businesses, and between procurement teams and other parts of businesses. Companies will also want to increase their speed to meet increasing consumer demand to remain competitive in their industries

Increased transparency due to social media and the prevalence of social data will require companies to be more accountable for their practices and actions, and will also give them a greater channel of communication with established and potential customers. The companies can then modify their processes and make procurement decisions based on what will ensure customer retention, sales, and overall success

Sustainability will become a bigger part of companies’ procurement solutions and strategies. Procurement management and functions will extend to creating sustainable and environmentally-friendly supply chains, partnerships, and agreements that are also economically viable. As more Millennials and young professionals become involved with procurement, the impact on both environmental and economic sustainability is expected to increase due to their openness to innovation and their different views on economics.

Ethics will also be prioritized in response to widespread consumer concerns and demand for ethically sourced products. Companies will be expected to use ethical ingredients, materials, and methods of sourcing and delivery.

Innovation will increase across the board, becoming the newest way that companies gain a competitive edge against one another. Companies will become more open to taking some risks and seizing unconventional business opportunities as a way to differentiate themselves and break out of repetitive industry traditions that do not bring them their desired levels of success. Innovation will also have to peacefully co-exist with established industry priorities like cost reduction

Risk assessment and management will undergo changes to accommodate innovation, the evolving technological world, and volatile political and global events such as Brexit. Companies will implement risk management practices and strategies that encompass total risk exposure as well as other factors like threat management, risk transfer pricing, and relationship risk assessment

Collaboration and cooperation between companies and their suppliers to improve or create procurement services and other services will be on the rise, shifting the focus to value, quality, and team efforts. Collaboration is a good way for companies to get the best value for their money, improve relationships with suppliers, and decrease costs over the long term

The people involved in procurement will have a significant impact on the transformation of the industry in the near future. More Millennials are entering the workforce and are helping change the way that businesses and procurement strategies operate. Additionally, more companies are hiring staff based on their soft skills rather than degrees and past titles, and are also hiring from unconventional (for procurement purposes) backgrounds such as education

Procurement is changing rapidly to keep pace with the evolving world around it, and its future looks bright. These expected changes to procurement will increase job opportunities, efficiency and productivity, customer loyalty and trust, and businesses’ overall profits and success.

For more information on top procurement trends:

Check out a more comprehensive version of this blog here:

Top 10 Procurement Trends in 2018

Spend Consolidation Helps IT Major Achieve over USD 10 Million in Savings

Business Challenge: Issues arising due to de-centralized procurement

One of our leading clients belonging to the IT sector understood that their different business units across regions were performing independent sourcing and procurement activities, and this can be controlled in order to achieve improved savings.

Situation: The client wanted to identify ways of consolidating spend across departments and regions

The client was lacking clarity on the overall spend levels, as the different departments were performing independent sourcing and procurement activities. The client wanted to identify ways of saving costs and improving the overall process, through consolidation.

Approach: Identified potential consolidation opportunities and developed recommendations on best practices

We conducted a detailed assessment of the existing spend areas at an individual business unit/region level. Once we developed an understanding of the spend levels, we did an evaluation of the supplier base. This helped us in identification of common suppliers across business units, and assess the potential consolidation and cost saving opportunities. We also did an assessment on best practices followed in contracting/licensing and negotiation with the suppliers, and developed recommendation to the client based on it.

Impact: Client was able to achieve over USD 10 million in savings through spend consolidation and implementation of our recommendations

The client was able to consolidate spend across business units and regions. They were able to identify and eliminate duplications in purchase resulting in significant savings. The client also was able to implement industry best practices based on our recommendations.

Controlling maverick spends

Lack of centralized control

Increase in restructuring efforts

Development of insect-control traits

Adoption of precision farming

New regulations

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