Supply Market Intelligence: Benefits and Tips to Gain a Competitive Edge in Procurement
WP – PROCUREMENTS NEW ERA DRIVING VALUE THROUGH STRATEGIC CATEGORY MANAGEMENT
Strategic Category Management: Going beyond ‘strategic’ in strategic sourcing
Five Best Practices in Spend Analysis for Businesses to Remain Competitive_final
E-sourcing is simply the digitization of the sourcing process which involves consolidating proposals, quotes, and e-tenders from various suppliers. Traditional sourcing processes are time-consuming and tedious and are unable to handle a large volume of information. As a result, sourcing of goods and services is carried out with limited available information and is based on the relationship with the supplier. However, the advent of modern technology has changed this trend as organizations have now realized the cost saving potential of a good sourcing strategy.
Implementation of an appropriate e-sourcing tool can help optimize productivity and lower annual spends in the following ways:
More Data Leads to Informed Decision Making
Data and information on supplier prices and offerings are easily recorded within the e-sourcing application, which also facilitates digital quotations, catalogs, and e-tenders. A procurement manager is equipped with vast information to base his decision on as it enables him to invite multiple bids from different suppliers, analyze product and price offerings, and contract terms of multiple suppliers. The data collection process should start right from the spend analysis, which gives the procurement manager information on most important categories and best cost saving opportunities. This paves the way for e-sourcing project selection by evaluating top opportunities with regard to organization goals and Time to Value (TTV).
Cost Savings and Improved Efficiency
Access to a large number of suppliers, analysis of their offerings, and process digitization helps organizations maximize on cost-saving opportunities. It also speeds up the procurement process by reducing the time for the tender process, reducing the person hours required for sourcing and procurement activities, and eliminating lengthy paperwork.
Improvement in Supplier Relationship
E-sourcing provides transparency in transactions between buyers and sellers as suppliers can have a glance at all tender opportunities with all the details listed. The communication delay is eliminated as suppliers are fully aware of all the bids and tenders, which are directly processed through the portal. Since e-sourcing eliminates all geographical barriers, procurement managers can look forward to suppliers from much larger geographies.
Better Compliance and Risk Reduction
Digitization and systematic approach of e-sourcing eliminates lengthy paperwork for contract compliance adherence – facilitating internal audit. With the help of e-sourcing, procurement managers can create templates for sourcing activities, which ensures adherence to policies and conditions.
A purchasing manager is presented with a vast amount of data and information for his sourcing needs. It paves the way to devise a better sourcing strategy by helping the purchasing manager to decide on the appropriate RFx document.
To know more about e-sourcing and how it can help in effective procurement:
- Building A Strategic Partnership Between Procurement and Marketing
- Strategic Sourcing and Supply Market Intelligence – Best Friend’s In The Making?
The global pharmaceutical packaging industry is rapidly growing due to the use of biodegradable materials as it adds to the sustainability of the packaging through all the stages of the pharmaceutical supplies lifecycle. However, the unpredictability in the price of the raw materials used in this industry may pose a significant challenge to the key market stakeholders.
The Procurement Pain Point and Insights Offered
A global pharmaceutical products company wanted to cut down the costs of the goods associated with pharmaceutical supplies. Furthermore, they also wanted to incorporate the best practices and consolidate their procurement strategies with suppliers from different countries. The client also wanted to streamline their existing procurement process for pharmaceutical supplies and identify potential cost saving opportunities.
SpendEdge carried out an in-depth research process consisting of primary and secondary research methodologies coupled with qualitative and quantitative data collection methods to cater to the specific category requirements of the client. Furthermore, the suppliers were also graded based on the standards and allotted weights. The final supplier selection was carried out on parameters including geographic coverage, qualitative assessment scores, previous experience with the vendors, and product development and tooling costs. Moreover, we collaborated our research with a huge database of exclusive resources such as industry journals and reports, white papers, and news articles. The best practices study on the sourcing of pharmaceutical supplies also helped gain a better understanding of the procurement best practices for pharmaceutical supplies and the vital service offerings of the medical suppliers.
This best practices study on the sourcing of pharmaceutical supplies helped the client identify and reduce the list of the major suppliers offering pharmaceutical packing solutions. This list offered by SpendEdge also helped the client achieve better high-cost savings compared to the current spend. Additionally, material cost indexing and steady conversion costs were also negotiated.
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The latest procurement market intelligence study by SpendEdge on the sourcing and procurement process for a leading technology company helps streamline the sourcing and procurement process for major spend areas and provides on-going support to its category managers.
Sourcing and procurement – market at a glance
Procurement focuses on the logistics of acquiring materials whereas sourcing is to find the best and cost-effective suppliers for the resources. Striking a perfect balance between sourcing and procurement will lead to a successful service delivery. With sourcing playing a key role in the procurement process, market intelligence experts recommends setting up strategic sourcing and procurement groups to achieve a streamlined supply chain operation. Using technology as a tool will help organizations ensure efficient structure in their workflow and process systems. Productive sourcing and procurement functions will help companies define, measure, and raise their performance to match the competition in the market.
Growing demand for automation in the sourcing and procurement process is encouraging companies to adopt innovative technologies. Organizations are using advanced software technologies to automate sourcing activities such as invoice processing, supplier evaluation, supplier-bidding, supplier negotiation, supplier selection, and other sourcing related activities. Automation will help reduce manual errors, costs, and offer visibility in the end-to-end supply chain management systems.
Domain specific sourcing and procurement services
The market intelligence study addresses issues related to specific domains in an organization such as MRO, facilities, IT, and marketing-related spend areas. Obtaining information on industry best practices regarding how these categories are managed by best-in-class market players will help improve the overall process effectiveness of the company. Moreover, analyzing the current category sourcing and procurement strategies will allow enterprises to make well-informed business decisions.
Emergence of mobile sourcing technology
Implementation of mobile sourcing technologies will help organizations to manage end-to-end sourcing process. Using mobile technology will increase mobility in their transactional process and help companies design superior pricing and supplier engagement models. Accessing sourcing related information will become easier through mobile devices and will help companies meet their long-term corporate goals to remain competitive in the marketplace.
What solutions SpendEdge offer to businesses
The procurement market intelligence team at SpendEdge performs a gap assessment to identify the key areas of improvement and offer insights on redefining the sourcing and procurement processes. The solutions offered includes:
- Improve process effectiveness and strategies based on the best benchmarking standards in the industry
- Offer insights on major spend areas and provide on-going support to its category managers
- Identify cost saving opportunities through assessment of current spend practices and improvement areas
- Improve process management through RFX support and supplier negotiation
- Implement category management strategy for the vital spend areas, and capitalize on supplier performance through implementation of supplier relationship management
Read our complete case study titled – Procurement Market Intelligence Helps a Leading Technology Company
Other case studies you might be interested in:
- Category Management Solutions Help a Global Engineering Service Provider Get a Detailed Understanding of the Category
- Assessment of Supply Market for a Leading Supplier of Paints, Coatings, and Specialty Materials
- Assessment and Optimization of Current Supply Base for a Leading Pharmaceutical Company
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Artificial intelligence and additive manufacturing (which includes 3D printing and related technologies) are exciting technologies. This is both because of how fantastical and futuristic they once seemed (and sometimes still do), and because of how much potential they have in a variety of industries and applications. While both are still fairly new, particularly 3D printing, they already have several uses in the supply chain for addressing procurement challenges, and will become even more useful as they are improved and refined.
The many advantages of additive manufacturing
Manufacturers are already taking advantage of additive manufacturing in several different ways, and as the process becomes faster and uses a greater number of materials, it has the potential to create fundamental changes in supply chain processes.
One of the common uses of additive manufacturing is rapid prototyping. It makes the creation of prototypes much easier and faster, allowing manufacturers to quickly test multiple iterations of a design. Product design can be very expensive and time-consuming, so rapid prototyping makes a considerable difference in how much development a company can afford to do.
Computer-aided design (CAD) also enable designers to perform many tests and examine multiple designs digitally, without needing to manufacture every prototype. Also, 3D printing makes it possible to create items that would be difficult or impossible to make using other processes. This allows companies to create parts that use less material and are more lightweight, saving money both in terms of material and shipping.
Finally, 3D printing also makes providing and obtaining spare parts easier and more efficient. Instead of manufacturers including spare parts that might never be used, or the buyer waiting weeks for a specific part to be shipped to them, the end-user can instead print the part themselves.
The potential to revolutionize supply chains
When this technology becomes more widespread and efficient, much more drastic changes are possible. 3D printing is currently limited in terms of how long it takes to print one object (from a few hours to at least a day), and in the types of materials that can be printed. When these factors are no longer an issue, there will be many more applications.
In the long term, companies may be able to shift production away from low-wage countries and closer to the end-user, reducing the time and expense required to ship parts and finished products halfway around the world. The ability to print products on demand will also make retailers more flexible, able to maintain a much lower inventory and to offer more customization options. While the unit cost may be higher under these methods, shipping and inventory costs would be considerably lower. These changes may still be some distance in the future, but they could make big waves when they arrive.
AI and Big Data
Artificial intelligence is already hard at work in the supply chain. Machine learning algorithms are able to take immense quantities of data, analyze them, and draw conclusions far faster than humans can. This is useful in many ways, such as locating inefficiencies in the production process and determining the best ways to reduce or eliminate them. AI can also analyze data from other operational aspects, such as financial information and team structure. By looking at information from many different parts of a business, it can find insights that would otherwise be missed.
Both of these technologies can create substantial savings in terms of expenditure and time. They can also reveal new information and enable more efficiency, in both designs and processes. They are very much worth investigating for those who are looking to improve their procurement intelligence solutions, and their future potential should not be ignored.
Business Challenge: Issues with identifying low cost sourcing destination
A leading manufacturing firm with operations across multiple countries wanted to assess the possibilities of sourcing a set of raw materials finished products from low/best cost sourcing destinations.
Situation: The client was lacking understanding of the key selection parameters
The client was interested in exploring the possibilities of procuring key raw materials and finished products from low/best cost sourcing destinations. However, they were concerned about the quality and operational difficulties, as they had a set supplier base and had not tried exploring alternative options.
Approach: Applied a systematic approach for identification and shortlisting of best alternate sourcing destinations
We took a systematic approach to identify, assess and recommend on the best alternative sourcing destinations based on client’s procurement pattern and spend levels. We initially conducted a benefits assessment to quantify the possible savings opportunities, followed by identification of potential sourcing destinations and shortlisting them based on the exact procurement needs of the client. We also identified potential risks with sourcing from the shortlisted destinations, and developed recommendations on mitigation strategies.
Impact: Client gained detailed understanding of possible low/best cost sourcing destinations and associated benefits and risks
The client explored the possibilities of procuring from alternative destinations and the potential benefits. They were also able to develop understanding of the potential risks associated with sourcing from the identified destinations and mitigation strategies for making effective go/no-go decision.