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Indirect Procurement

Indirect Procurement – Does it Offer Cost Saving Opportunities?

Indirect procurement, usually referred to as indirect spend, represents the purchasing of goods and services that are imperative for day-to-day operations of companies. Although it is invisible compared to direct spend, it usually accounts for 20% of the company’s total expenses. This is a huge number, especially for companies looking to reduce costs on a sustained basis to improve bottom-line profits in the current global economic scenario.

Despite the presence of numerous cost-saving opportunities, many companies still fail to achieve their desired level of profitability.  They find it quite challenging to efficiently manage indirect procurement costs. Therefore, in this blog, we are highlighting the key challenges companies face irrespective of their industry and the ways SpendEdge can help tackle them.

Wondering how efficient indirect purchasing strategies can improve the bottom-line profits for your organization? Request a free demo and find ways to improve your indirect procurement process.

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Key indirect procurement challenges

Challenge 1: Increasing number of stakeholders

Often, the diversity of materials and services that fall within the indirect procurement category makes it challenging for businesses to identify cost saving opportunities. The multiple channels through which materials and services are procured and the number of stakeholders involved adds to the complexity of the situation. This complexity is frequently seen as a barrier for companies aiming to control indirect spend cost.

SpendEdge strategically analyzes the indirect procurement process of clients and helps identify practices that can aid enterprises to reduce risks. It also quickens on-boarding processes and increases cost savings by improving the effectiveness of their indirect sourcing practices.

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Procurement Consulting Market: All You Need to Know

Is procurement a profit center or a cost center? That’s a debate for another day. However, it is hard to ignore the fact that companies can save millions and millions of dollars in their procurement process. The savings can arise from superior supplier selection, material purchase, risk assessment, and many other factors. These savings are not always evident, and processes such as supplier selection and risk management can get overly complicated. This is where companies need to consult experts in the field of procurement. As a result, they mostly turn towards procurement consultants.

Request Free SampleRegional market

North America and Europe are the most mature markets for procurement consulting services. These regions consist of a number of industry leaders that employ strategic procurement and are moving toward value chain integration. In the APAC region though, buyers are facing intense pressure to improve procurement as it is increasingly becoming an important source of goods and services. Fast-growing operations in countries such as China and India have resulted in the need to improve efficiency in operations.

Pricing outlook

Talent cost, including salaries, training, and development, is a major cost component for procurement consulting firms. While retention of talent is a top priority in mature markets such as North America and Europe, attracting talent is the focus for service providers in MEA, and it is training and development in APAC. Buyers are increasingly considering that their internal team lacks the capabilities to enhance their procurement strategy. This is expected to significantly increase the outsourcing of strategic sourcing and category management functions. This trend is especially evident in the financial services sector.

Cost drivers

Procurement consulting firms have to bear the employee costs including recruiting expenses, employee salary, and benefits which are expected to marginally increase due to inflation and the need to hire skilled professionals. Increasing need for service providers to retain talented consultants are expected to augment the salary costs for service providers. Also, the availability of advanced technology such as ERP software, automation, analytics, and cybersecurity, that enhances end-to-end procurement consulting services has increased service providers’ overall costs.

Negotiation strategies

Companies can save up to 8% of their cost base by adopting a reward-based engagement approach. This way consultants also increase their repeat business and bring innovation in services accessibility. Additionally, category management initiatives such as identification of cost-saving opportunities based on innovation, engagement, and billing can also result in significant cost savings.

Industry best practices

Category managers in this sector are focusing on developing a well-defined strategy to optimize procurement spend. They are identifying cost-saving opportunities such as adopting technologies, collaborating with vendors, and conducting price benchmarking studies to minimize the spend. Additionally, the focus is on developing strategic partnerships, where buyers and suppliers engage in contracts that do not work on incremental costs but are designed flexibly to incorporate prevailing market and pricing trends.

  

Read more about the market outlook of the procurement consulting market along with procurement insights, pricing models, supply market insights, and market innovations in SpendEdge’s upcoming report on the global procurement consulting market.

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IR35

Adoption of Automation Driving the Demand in the Stackers Market

SpendEdge Procurement Market Intelligence - StackersLondon, Mar 23, 2018: The growth of port infrastructure and rise in the adoption of automation across end-user industries, such as e-commerce, packaging, logistics and warehousing, food and beverage, and mining, have driven the demand for stackers that are used for picking and moving products at operational facilities of end-users. This, in turn, is driving the growth of the global stackers market.

SpendEdge’s latest procurement research report on the global stackers 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 facility management, 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 increased use of reach stackers at ports to move goods from the ship to the port facilities is contributing to the growth of the stacker market. Stackers help in efficient handling of goods with minimal damage during transportation from ship-to-shore.” – Tridib Bora, facility management expert at SpendEdge.

Buyers generally prefer to procure stackers that have high reliability to minimize unexpected breakdowns. However, buyers find it difficult to analyze and compare highly reliable stackers due to high customization and the availability of a large variety of models. As a result, procurement teams in this market are facing difficulty in analyzing the reliability of stackers.

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This procurement report on the glass stackers 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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Answers to the questions

IoT and EDC technologies Driving Innovations in the Drug Development Biometric Services Market

SpendEdge Procurement Market Intelligence Drug Development Biometric ServicesLondon, Mar 21, 2018: Increased investment in drug research and focus on cost reduction by outsourcing data management services have driven the need for drug development biometric services. Additionally, availability of technology platforms such as IoT and EDC that reduce the time required for manual report fabrication has also contributed to the growth of global drug development biometric services market.

SpendEdge’s latest procurement research report on the global drug development biometric services 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 pharma and healthcare, 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.

“Most pharma drug manufacturers and researchers do not possess the competency to conduct data management processes in-house. As a result, there is a demand for CROs and third-party clinical trial data management service providers that would conduct data management process efficiently, resulting in low cost for buyers and better management results.” – Bhuvaneshwari Udayakumar, pharma and healthcare expert at SpendEdge.

Suppliers providing biometric services for drug development may be using either proprietary software or source it from an IT products supplier. These solutions need to be compatible with the type of data collected in clinical trial so that statistical analysis can be made based on these data. As a result, procurement professionals face challenges in re-engineering clinical trials in this market.

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Request Free SampleThis procurement report on the drug development biometric service 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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IR25

Procurement Challenges Facing Buyers in the Refractory Market

Refractories are inorganic, non-metallic materials that retain their strength at high temperatures of more than 1000°F. A refractory is used to line hot surfaces that are found in most industrial processes as it is more heat-resistant than metals. Additionally, refractories can also withstand physical wear and corrosion caused by chemical agents. Refractories find application in furnaces, kilns, incinerators, and reactors. The increasing production capacity in the iron and steel industry has given the global refractories market a boost. These end-user industries account for 70% of the global consumption of refractories. (SpendEdge Procurement Market Intelligence Report) The APAC region is one of the largest contributors to the demand and supply, accounting for about 70% of the global spend. It is essential for buyers to procure a quality refractory at a competitive price to survive in the market. However, they are posed with specific procurement challenge in the process.

Request Free SampleProcurement challenges in the global refractory market

Selecting between precast and monolithic refractories

Precast and monolithic mixtures are the two basic types of refractories which offer unique advantages. For instance, precast shapes are faster to install; whereas, monolithic refractories are low-priced. Such issues pose a significant procurement challenge for buyers in the refractory market as they have a hard time deciding on their requirement. To tackle such issues, buyers must evaluate the TCO including the cost of material, labor costs, and maintenance costs of using either type of refractory.

Handling and storage challenges

Refractory handling and storage is a big challenge for companies as improper handling may cause alteration of physical and chemical properties of refractories, rendering them unusable. Companies usually invest marginally in material handling and material storage of refractories as it only accounts for 2%-3% of the overall costs and lists low on their spend category. One way to effectively combat such issues is to look for third-party service providers that have competency in logistics and storage of refractory materials.

Raw material price fluctuations

Alumina and silica are prime raw material required for the manufacturing refractories. The same material has high demand across other end-user industry as well. Consequently, there is high price volatility due to the imbalance between demand and supply. As a result, buyers study price fluctuations, as suppliers are forced to pass on the loss to buyers. To protect themselves against such price fluctuations, buyers can engage in forwarding contracts for material pricing ensuring consistent pricing over a period of time.

Pressure on industry to reduce material and energy consumption

Refractory manufacturing has a high environmental impact, putting it under the radar of regulatory bodies such as EPA. As a result, buyers have to monitor the volumes of refractories used in their production process and strive to reduce the material used. Also, buyers are often required to report material usage and reduce material consumption for per ton production of end-product. Additionally, they must also engage in reuse and recycling practices to reduce material usage and engage with suppliers who can customize a refractory, based on their requirement.

For more information on the top procurement challenges in the refractories market along with supply market insights, procurement best practices, pricing models, and supplier selection criteria in SpendEdge’s upcoming report on the global refractories market.

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IR30

Factors Hindering the Growth of the Global Rapeseed Oil Market

In 2015, the Telegraph UK came up with an article on rapeseed oil headlined, “Goodbye, olive oil: why we’ve all fallen in love with rapeseed.” Even today, the headline perfectly outlines the growing popularity of rapeseed oil as a healthier home-grown option. Consequently, it is also the third-largest source of vegetable oil in the world after palm oil and soybean oil. The oil is extracted from the seeds of the Brassicaceae flower, which is a common crop in Europe. Rapeseed oil is commonly used in culinary applications such as sautéing, frying, and baking. It is preferred over other oils due to its higher smoke point compared with other vegetable oils. This oil has higher essential fatty acid contents and has the lowest saturated fat levels compared to any other oil. Owing to such health benefits, the demand for rapeseed oil is on the rise in emerging economies such as China, India, and Brazil. The procurement market intelligence report from SpendEdge estimates the market to grow at a CAGR of 4.64%. Although the market faces a healthy growth prospect, suppliers in this market have to overcome a few challenges to take advantage of the market’s growth.

Request Free SampleChallenges in the Rapeseed Oil Market

Threat from disease and crop infection

The rapeseed plant can be affected by series of infection which affects various parts of the plant across its lifecycle. For instance, fungal diseases such as Sclerotinia stem rot is caused by the fungus Sclerotinia Sclerotiorum, and the fungus Leptosphaeria Maculan causes blackleg. Such infections are further complicated by rainfall, as it drives up the infection rates. For instance, in Australia, a prolonged period of rainfall resulted in yield losses of about 25% in 2016. A severe reduction in the crushing volume increases the prices for rapeseed oil. To tackle such problems, regulatory bodies across regions have created guidelines for cultivators to manage aspects such as field selection, use of fertilizers, weed control, and harvest cycles for rapeseed.

Wide range of available substitute

The vegetable oil market has a wide range of substitute products available. Be it in the field of food applications or non-food applications, the number of oils available is enormous. For instance, people across the world use either sunflower, safflower, coconut, olive, soybean, or peanut oil for culinary applications. Also, rapeseed oil can be substituted by soybean, kernel, or palm oil in non-food applications. Dietary revolution is a major factor in determining the preference for a particular kind of oil. Over the last few years, people are increasingly using extra virgin olive oil due to its light and fruity flavor and other health benefits. According to industry estimates, the consumption of olive oil increased by 250% and 1,400% in the US and Japan, respectively, in the last 25 years.

Adulteration and contamination

Suppliers in the vegetable oil market are adulterating edible oils with inexpensive oils such as bran and cottonseed oil to save costs. Such cases are prominent in emerging economies where the supply chains are not structured. Such adulteration and contamination can have serious health issues as well. For instance, in the spring of 1981, adulterated rapeseed oil created toxic syndrome that affected about 25,000 people. Also, the mixture of mustard oil with inexpensive argemone oil causes dropsy disease, which causes oxidative stress and the death of RBCs. It is possible to use brassicasterol to detect adulteration of rapeseed oil.

Health and safety issues

Although rapeseed oil is considered to be more healthier than other oils, its high content of omega-3 fatty acid can make it rancid and foul when exposed to oxygen and high temperatures. Additionally, some reports link consumption of canola oil with kidney and liver diseases, hypertension and stroke, and retarded growth among infants. The availability of such reports could affect the sales and consumption of canola oil.

Read more about the challenges in the rapeseed oil market along with supply market insights, procurement best practices, sourcing models, and key suppliers in SpendEdge’s upcoming report on the global rapeseed oil market.

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What’s Happening in the Global Clove Oil Market?

Cloves occur in nature as unopened pink flower buds of the evergreen tree and are indigenous to Indonesia and Madagascar. Such cloves are handpicked and dried until they turn brown, after which they are grinded to powder form and then converted to essential oil for medicinal purpose. Cloves are essentially high in manganese and other nutrients such as magnesium, calcium, and potassium. Due to its nutritional content, it is widely used in aromatherapy and flavoring. Additionally, clove oil has a variety of other benefits ranging from anti-inflammatory for oral infections to curing toothaches and acne. Due to its ever-increasing demand from pharmaceutical, fragrance, and food industries, the demand for clove oil is expected to rise to six thousand tons by 2022. (SpendEdge Procurement Market Intelligence Report)

Request Free SampleTop trends in the clove oil market

Government support for clove tree farmers

African and Indonesian governments are increasingly introducing initiatives to support local clove tree farmers to boost economic growth. For instance, the government of the Republic of Tanzania has implemented measures to boost production through policy reforms and law amendments. Such measures are undertaken to increase the production and purchase of cloves from the farmers themselves. As a result of such initiatives, Tanzania grew its cloves export from $20 million to $54 million in 2016 within a span of one year. Additionally, in March 2017, the Indonesian government formed a farmer’s learning group in the Buol district of Sulawesi to facilitate information sharing among farmers about best-practice agroforestry farming techniques.

Increasing uses for essential oils

The demand for essential oils all across the world is in the rise attributing to increased use as raw materials in the food, pharmaceutical, cosmetics, and spa industries as well as across several other products. One of the major applications of clove oil is as an ingredient in toothpaste and mouthwashes to promote oral hygiene. Additionally, it is also used as massage oil in the aromatherapy industry. With such lucrative opportunity existing in the clove oil market, suppliers such as dōTERRA and Young Living are focusing on expanding their product offerings through direct selling channels.

Increased awareness of clove oil benefits

Clove oil is used in aromatherapy as it reduces anxiety, eases depression, and speeds up the healing process. End-consumers are getting to know such benefits of clove oil, and with an increased inclination towards leading a healthy lifestyle, there is an increasing tendency to use the essential oil for aromatherapy. Such health benefits will drive consumers to demand the natural essential oil in the long run.

Modern essential oil extraction method

Oil extraction methods such as expression-based, enfleurage, and steam-based distillation have been widely and commercially used in the oil industry. Such methods aren’t as efficient as modern techniques. Additionally, some modern techniques are more suited for certain applications such as perfumery. For instance, solvent-based extraction makes the use of hexane and acetone to separate the oil. Percolation and phytonic process are some of the new techniques used for clove oil extraction. These techniques reduce the overall operational cost for the supplier and enable them to pass on the saved costs to the buyers. In addition to reduced costs, such methods will also increase the overall production volume of clove oil and also reduce the fixed costs for suppliers.

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

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Outsourcing services

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

SpendEdge Procurement Market Intelligence InfographicsLondon, 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.

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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

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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IR13

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.

Request Free SampleTrends 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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IR6

The Digital Future: Why is the Demand for Ediscovery Consulting Services on the Rise?

Investigation agencies and lawsuit firms are highly reliant on conclusive evidences which are stored in the form of digital data. They acquire the services of ediscovery companies to assess, analyze, develop, and implement strategies to maximize the legal ROI. Such electronically stored information contains data including emails, presentations, voicemail, audio, documents, websites, video files, and social media. The benefit ediscovery solutions provide over traditional hardcopy evidence is that it contains metadata such as time-date stamps, file properties, and author and recipient information. The market for ediscovery consulting services is growing at an impressive CAGR of 15.6%. (SpendEdge Procurement Market Intelligence Report – Global E-discovery Consulting Services) The market for ediscovery services is on the rise due to frequent changes in laws pertaining to data sharing and data privacy.

Request Free SampleGrowth drivers in the ediscovery services market

Exponential rise in data volumes

The overall data volume is expected to grow tremendously in the near future due to increasing digitalization and new electronic information sources. Additionally, it has been estimated that corporate data will grow at a rate of 40%-60% each year by 2022. Such growth in corporate data can be attributed to data generated by IoT devices and personal assistants such as Alexa, Siri, and Cortana. There’s been a radical shift in the use of electronic data as compared to human-generated data, resulting in the need for efficient e-discovery consultation efforts. For instance, in a 2015 murder investigation, content from an Alexa-integrated Amazon echo device formed a part of e-discovery.

Stringent laws and regulations

The instances of data breaches has been on the rise lately. In 2016, the average cost of data breach stood at US$3.5 million. As a result, several changes have been introduced in laws around data privacy and anti-bribery which increases the complexity of the compliance process. Companies can face considerable penalties in case of non-compliance. To abide by the compliance norms, companies need to have comprehensive structures and support in place. As a result, companies are banking on ediscovery consultants to ensure compliance with new laws.

Increased IT spending

Businesses are forced to spend millions of dollars in secure IT infrastructure to tackle the rising number of dispute cases and investigations. The political instability that surfaced with the Trump administration and Brexit have further complicated the legal landscape. Enterprises are reducing compliance and legal risks by relying on e-discovery solutions to manage data, avoid data breaches, reduce unnecessary documentation, and to design a secure repository for organization documents.

Mobile mediums and remote access

Increase in globalization and outsourcing activities has resulted in higher workforce mobility. Although workforce mobility benefits the organization positively, it increases the complexity of managing data storage and access. Additionally, employees across organizations prefer mobile mediums such as smartphones and tablets for their information needs. With organizations encouraging bring your own device (BYOD) culture and remote access, complexity in data management is a certainty. Such practices can increase the legal risks, which is why organizations are considering ediscovery software to manage and preserve such data and resulting risks. Ediscovery tools allow organizations to provide legitimate access to enterprise data on personal devices.

Read more about the growth drivers in the ediscovery consulting market along with key vendors, pricing models, procurement challenges, supply market insights, and cost-saving opportunities in SpendEdge’s upcoming report on the global e-discovery consulting services market.

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