Procurement Market Intelligence: How a Pharmaceutical Company Achieved Cost Savings on Categories Using Plastic Polymers

The Business Challenge

A well-known pharmaceutical company that markets its products to healthcare practitioners, hospitals, and managed care providers in over 15 countries was facing predicaments in optimizing business process results. Their inability to track the supply market conditions was increasing the turnaround time for the Purchase Requisition (PR) to Purchase Order (PO) process. The lack of metric visibility, proper control mechanisms, and cultural barriers was restricting global standardization and scalability of business operations. The inefficient mechanisms were further resulting in excessive costs for the company.

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Solutions Offered

In partnership with the client, the procurement specialists at SpendEdge conducted a detailed analysis of the supply market from the perspective of the pharmaceutical company and offered them with in-depth procurement market intelligence insights. They formulated effective strategies for achieving sourcing and procurement excellence, which helped the client to maximize its ROI. This substantially reduced the time spent on analysis and curating information and enabled them to focus on strategic sourcing and cost reduction opportunities.

A centralized and standardized transactional procurement process was introduced to create strategic and tactical functions. Under the new scheme of things, strategic activities were performed to eliminate delivery disruptions and reduction in payment disputes. Unproductive and inefficient processes were further identified across sites to measure the effectiveness of service delivery results. The strategic group was made responsible for category management across sites to proactively leverage global volume and monitor industry trends.

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Key Findings

Reduced Cycle Time

The standardized processes refined the Purchase Requisition (PR) to Purchase Order (PO) process and reduced the cycle time to 0.5 days from 2 business days. The metrics implemented improved the visibility of productivity and service levels within three months. Also, the procurement market intelligence solution helped consolidated major suppliers in the supply market who can provide end-to-end service and meet their changing demands.

Achieved Cost Savings

The procurement market intelligence solutions rendered by experts further helped the client to realize cost savings on categories which predominantly use plastic polymers (as the prices of polymers declined from their level in 2017-18). They developed a robust contract compliance team and established a contract having provisions for raw material price adjustments to deal with market fluctuations.

How Procurement Market Intelligence Solutions Help Companies?

Procurement market intelligence solutions help gather and analyze the information relevant to a company’s supply markets and improve the procurement process. They help classify critical-to-quality factors that influence the buying behavior and leverage and identify the costs associated with energy, overhead, materials, labor, transportation, profit, and other cost components. Also, procurement market intelligence solutions help reduce risks, increase savings, and improve decision-making capabilities for companies.

Leveraging procurement market intelligence solutions can offer numerous benefits for businesses. Get in touch with our experts and know how our procurement services can help you leverage the benefits of procurement market intelligence solutions.

Procurement Intelligence Solutions for a Retail Company – A SpendEdge Success Story

Procurement Intelligence Solution Transforms Finance Operations and Enhances Supply Management

About the Client

The client is an American multinational retail-clothing firm. With over 500+ stores, the company employs around 57,000 people globally.

The Business Challenge

With changing consumer behavior and technological innovations, retailers across the globe are uncovering new ways to sustain from the disruption. Moreover, retail brands are coping with a long-term uptrend in commodity and other raw materials input prices, and rapidly shifting global supply chain. These mounting global supply chain complexity with retail markets is forcing retail companies to be more agile and react faster than other players in the market. This is where procurement intelligence comes into play. In today’s competitive market scenario, procurement intelligence is the key to establishing long-term strategic sourcing and supply management plans.

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Top Players in The Global Contract Staffing Service Market

The staffing industry is changing, and as a result, direct placement recruiters are turning to contract staffing companies. Contract staffing could prove beneficial for companies looking for improved cash flow and better relationships with clients. For organizations that are uninitiated with contract staffing, there’s nothing to fret. In contract staffing, there is only one additional step for the recruiter when compared to direct placement. This includes determining who is responsible for the basic tasks and functions such as employee on boarding paperwork, payroll funding and processing, taxes, insurance, collections, and ACA compliance issues. Organizations can either choose to handle these tasks themselves or outsource all of the burden to contract staffing companies.

SpendEdge’s latest procurement intelligence report on the global contract staffing market reveals actionable insights into the factors impacting contract staffing, the growth patterns in this sector, and the key supplier selection criteria:

Top contract staffing companies

Adecco

The company is based in Zurich, Switzerland. Adecco is a Fortune Global 500 company and is one of the largest contract staffing companies in the world. Adecco, founded in 1957, was formerly known as Adia. In the year 1990, it merged with Ecco, one of the leading contract staffing companies to form Adecco. In 2015, the company acquired Knightsbridge Human Capital solutions, a Canada-based market leader in career transition, leadership, and talent.

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4 Ways to Improve Supply Chain and Procurement in the Automotive Industry

Today, the automotive industry is one of the most rapidly growing industries globally. Furthermore, being the most innovative sector, a fierce competition is at the core of the automotive industry. In fact, it would not be wrong to say that the success of both the manufacturers and the suppliers in the automotive industry is completely dependent on their collaborative behavior against the need of the customer. One of the most common issues currently impacting the automotive industry supply base is keeping up with the growing volumes, which has resulted in shortages in supply. Aiming at the outcomes, a competitive supply chain capability not only assures the delivery of component material on-time but also the execution of inbound supply to guarantee the shipment of quality finished goods at a competitive price. Therefore, improving procurement and supply chain process in the automotive industry is a significant challenge as well as an opportunity today. So, in this article, we have discussed a few very important ways to boost the supply chain and procurement which in turn can result in improved cost savings as well as better customer experiences in the automotive sector.

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Striving for Procurement Excellence? Here’s What You Need to Do

The role of procurement in organizations is no longer a matter of debate. Sourcing and procurement have been gaining increasingly strategic relevance in companies and has been the object of constant attention as it is directly related to the level of effectiveness of the organization and closely connected to the company’s cost structure. There is a new recognition in companies of the positive impact that procurement excellence can have on important performance indicators, like costs and spend patterns. Now, top players across industries are contemplating ways to attain sourcing and procurement excellence in order to gain a sustainable cost advantage for business. Furthermore, companies can analyze their procurement operation and think strategically using reliable data which is a foundational building block of procurement excellence.

Execute transformational changes

Leading organizations leverage internal and external data while undertaking transformational changes in procurement. This helps them shift focus to strategic buying vs. tactical procurement. Combining these elements give companies unprecedented visibility over their procurement functions and better leverage its role in increasing profitability. Companies that have harmonized data around their spending tend to attain sourcing and procurement excellence. For instance, while purchasing raw materials, manufacturers must gain an understanding of the change in spending on a year-on-year basis in order to proactively pinpoint and cater to any significant fluctuations.

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Achieving Successful Strategic Procurement in the Chemical Industry

Strategic procurement is a plan that is crafted with the sole objective of achieving goals that may be quite far off in the distance, such as five or ten years into the future. A strategic procurement strategy not only helps come up with short-term solutions but rather involves coming up with strategies that will serve the long-term purpose. In any organization, strategic procurement plans are created by top-level management and the same applies to firms in the chemical industry. A strategic procurement plan also influences the tactical procurement plans that are developed and implemented. It is a comprehensive plan that takes into account the targeted objectives and needs of the procurement department of the firm. Strategic procurement is one of the most significant tools that helps in maximizing the value contribution of any company. It serves as a guide for any organization and should be updated regularly at the interval of a year to ensure its alignment with the overall business strategy.

In this blog, the procurement experts at SpendEdge explain some of the strategies for developing a successful strategic procurement plan for the chemical industry. (more…)

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Forming a World-Class Procurement Organization: A Transformational Journey

Forming a World-Class Procurement Organization – A Transformational Journey

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.

Regional 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.

The Future of Procurement in the Digital Age: Planning Today for the Procurement of Tomorrow

4 Spend Analysis Challenges Procurement Teams Should Know About

Spend analysis is undoubtedly an essential function of procurement in a business. Spend analysis, when correctly performed, can lead to insightful findings and better savings, and often act as a catalyst to drive business decisions for a company. Using a spend analysis solution allows companies to uncover the hidden potential lying within their data. Businesses can empower their team with business intelligence to make discoveries that can quickly grow the sourcing pipeline. However, procurement teams implementing a spend analysis solution can often face several challenges and roadblocks. Here are four of the critical challenges that we think procurement teams must overcome for undertaking spend analysis successfully:

Cleansing the data

The tasks to extract, cleanse, classify and normalize spend data should not be underestimated. Traditional, rules-based approaches to cleansing and organizing spend data can be time-consuming and may introduce inconsistencies if carried out manually. Automated methods may be quicker, but exceptions will undermine completeness, and therefore accuracy.

Insufficient resources

The purchasing team is of a company is often consumed with daily tasks such as buying basic materials for the organization. Spend analysis usually starts with purchasing and strategic sourcing. For this, procurement teams require IT support. Although the need for IT support has lessened significantly over the years, procurement teams still need to allocate resources to spend analysis and strategic sourcing to drive leverage across the organization.

Data silos

Each group managing spend has their own systems and their own data. In most companies, for security reasons, no one person has access to all the different systems. So, if procurement teams want to pull together all the data, different people have to be approached for various data.In this case, there are chances of encountering varying attitudes and degrees of cooperation from people having access to the data. Also, in many cases, data may be incomplete, inaccurate, or even inconsistent. In a rush to satisfy a requirement, some descriptions are too brief to understand the nature of the spend; sometimes errors in coding occur; and many times the same company may be referred to in different ways. These might cause confusion and miscommunication during procurement.

Resistance to change

Spend analysis can often be misunderstood. It can represent a threat to some stakeholders including customers, contracting officers, financial managers, etc. The best way to address resistance is with education. Develop briefings to educate anyone with an interest, informing them about what speed analysis is, how it can benefit them, and how can it contribute to success.