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How Following Procurement Best Practices Helped an Automotive Company to Reduce Sourcing Costs by 11% – A SpendEdge’s Success Story

The Business Challenge

The client, a well-established automobile manufacturing company in the US, was facing a number of challenges due to drastic shifts in the global supply chain. Since they were looking to expand their business to new and emerging markets, they wanted more information on the procurement best practices. Developing a suitable business model was a key challenge for the automotive company since these markets were posing challenges related to global trade and finished vehicles logistics fulfillment. This was increasing the need to reduce production costs and excess spend. Their primary aim was to outperform competitors, both in home and emerging markets, by reducing operational costs, increasing efficiency, and following the best practices to meet the regulations of the emerging markets.

Want to know how following procurement best practices can help your business reduce excess spend? Get in touch with our experts now!

Solutions Offered

To address the needs of the client, the experts at SpendEdge identified the procurement best practices for the target region and tailored a plan that would allow them to procure raw materials at the lowest possible price. The analysts at SpendEdge followed a scrupulous research methodology that comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.

In a span of eight weeks, the automotive manufacturing company was able to successfully lower their sourcing and procurement costs by 11%. Our expertise in analyzing the procurement trends and regulations of international supplier markets further helped the automotive company to improve their relationship with key suppliers and minimize procurement risks. By following the suggested procurement best practices, they were finally able to maintain a healthy relationship with suppliers. The engagement also emphasized on the importance of selecting the right supplier, especially when it comes to ensuring the highest quality, flexibility, and cost efficiency of their supplier networks.

Key Findings

By adhering to the suggested procurement best practices, the client was able to enhance their procurement system and synchronize supply management with demand across business processes. They were also able to evolve from a fixed-cost-driven supply network to a variable-cost-driven value network and streamline information flow from the department level to a global scale. This reduced costs for the automotive company by 11.2%.

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What are the Basic Principles of Procurement Best Practices?

Procurement has become a fundamental enabler of business strategy and a preferred method for achieving sustainable cost reduction for many business entities. It is considered to be the most viable option for process simplification with technology enablement. Therefore, businesses should adopt procurement best practices to realize the full potential of their sourcing process.

While following procurement best practices, the team should strike the right balance between short-term savings opportunities and longer-term transformational opportunities. This provides good traction, better substantial benefits, and supply management for companies. Here are a few procurement best practices that companies should follow:

  • Devise a spend map
  • Engage with a wider organization to reduce costs
  • Ensure supply management and contract management
  • Connect commercial and technical capabilities


Procurement Best Practices That Will Help Businesses Stay Competitive In 2019

Doing what you’ve always done is no longer acceptable in business. There are always a set of best practices that can be employed to maintain business excellence and improve productivity. The same is applicable for a companies’ procurement process as well. Companies need to follow procurement best practices to increase their revenues by being cost-effective.

Many government and commercial organizations have started recognizing procurement as a fundamental enabler of business strategy. It is a viable source of opportunity for process simplification and also provides detailed insights into operations through data and information. Therefore, organizations should focus on enforcing procurement best practices benchmarks that can enable them to realize the full potential that procurement can deliver.

At SpendEdge, we understand the impact that a procurement process can have on business. Therefore, in this blog, we have listed out procurement best practices that will ensure supply chain excellence for companies.

Want to improve the efficiency and effectiveness of the procurement process? Get in touch with our experts and know how adopting procurement best practices can help your organization.

Procurement best practices adopted by companies


Digital procurement strategy is not just limited to creating an online shopping cart or optimizing the website. It incorporates data from numerous sources such as sensors in warehouses and social media and enables companies to create an approach that can address the needs of the audience. Therefore, businesses should adopt digital procurement solutions and strategies and try to reduce waste and unneeded inventory costs. This is one of the procurement best practices that companies can follow  and increase their process efficiencies.

Centralized supply management

A centralized supply management system enables companies to make purchasing and sourcing decisions based on the information and data received from the various departments and experts in an organization. This helps companies to mitigate risks associated with unmanaged direct spend and is considered as one of the procurement best practices by experts. Moreover, such procurement practices ensure the prevention of unnecessary spending with unapproved suppliers.

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Improve total cost of ownership

Strategic sourcing empowers companies to not just examine the purchase price, but also examine the total cost of owning or consuming a product or service. Even best-in-class companies have stopped selecting suppliers merely on the basis of price. They analyze the complete procurement process and then implement procurement best practices that can reduce the total cost of ownership.

Strengthen supplier relationship

Companies today are focusing on “supplier relationship management.” They are adopting various alliance management programs that can provide them a mechanism to strengthen their relationship with suppliers. They are even creating platforms for problem resolution and developing continuous improvement goals to achieve value for both parties.

Optimize inventory

Optimizing inventory becomes extremely crucial for companies during the economic downturn. Putting inventory on the radar help financial officers to find new ways to improve the bottom line and reduce working capital. Therefore, supply chain organizations are advised to review their inventory quantities and adopt procurement best practices.

Want to know how your organization can utilize procurement best practices to drive optimal client outcomes? Request a free demo today!

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