Tag: spend analysis benchmarking


SpendEdge helps a Fortune 500 Medical Device Company Improve Savings Through its Spend Analysis and Benchmarking Services

Category Overview

The medical devices market will witness significant opportunities for growth in the coming decade primarily due to the introduction of innovative devices in the market and by the demand generated by illnesses related to the aging global population. However, the medical device companies are required to exhibit a high level of cost-effectiveness for the products owing to the tighter regulatory and reimbursement policies, particularly in the emerging economies. As a result, many medical device companies have started opting for spend analysis and benchmarking services to identify and optimize their spend areas to maximize profits and streamline processes.

The Procurement Pain Point and Insights Offered

A fortune 500 firm with offices spread across the globe wanted to gain insights on the category and supplier pattern analysis. They also wanted to find out the key vendors in the market and gain insights into their spend pattern. Furthermore, they also wanted to gain an understanding of the superior strategies to enter into a contract negotiation with the current suppliers.

The spend analysis analysts at SpendEdge followed an in-depth two step research methodology, which included primary andRequest Free Proposal secondary research coupled with qualitative and quantitative data collection methodologies to cater to the specific category requirements of the client. During the course of this assessment, the client gained insights on the ways to decrease procurement costs, improving efficiency, and monitor compliance. Additionally, the client could identify the vendors based on parameters including geographic coverage, qualitative assessment scores, previous experience with the vendors, and product development and tooling costs. This spend analysis assessment also helped them understand the spending pattern other key suppliers. Furthermore, the client discovered a better negotiation strategy to enter into a contract negotiation with the current suppliers.

Business Outcome

The spend analysis and benchmarking assessment helped the client identify the current state of spend and an intermediate term spend strategy. Additionally, the client was offered suggestions on new ways to improve their process efficiency. SpendEdge’s spend analysis and benchmarking assessment also provided insights on the possible ways of improving the savings by identifying and optimizing spend areas.

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Tail Spend Management and Why Your Business Needs it

Tail spend management (TSM) is an art and a science that helps in effectively managing the organizations spend activities and optimizing its procurement function and supply chain. Tail spend management is based on the Pareto principle, more commonly known as the 80:20 rule. The entire concept of Pareto principle is based on one rule that 80% of the effects comes from 20% of the causes. Likewise, out of the total supplier base of an organization, approximately 80% of the suppliers account for only 20% of the total spend. And this bottom 20% of the total spend are termed as tail spend.

Owing to lack of time, people constraints and growing complexity of supply chains, organizations often ignore the benefits of an effective tail spend management. Earlier, the management was of the opinion that the resources invested in tails spend management was not worth the end results. Tail spend can be defined as that portion of spend across different spend categories that is not managed actively and has an adverse impact on the organizations financial position. We, at SpendEdge, are here to solve these misconceptions about tail spend management and tell you why TSM is essential for your organization.

Why Do You Need Tail Spend Management?

Organizations are increasingly pressurized to reduce costs and create sustainable cost saving opportunities. This is one of the reasons why organizations are taking recourse to tail spend management. Apart from these there are various objectives to initiate a TSE program in the organization, which are as follows

  • It aids in understanding spend coverage, enables spend visibility across various departments and thereby helps in identifying opportunities for cost savings.
  • Tail spend management helps in identifying opportunities to enrich processes, thereby mitigating business risks and optimizing the organization supplier base.
  • It also helps in driving compliance to set organization standards and internal policies.
  • It facilitates effective spend management, identifying maverick spending and preventing scams.

Four Benefits of Tail Spend Management

Tail spend management as a concept may sound complex at first, but it is easy when practiced. A vast supplier base with smaller spend volumes means the business was unable to achieve economies of scale, which makes managing the tail spend an uphill task. However, organizations must note that TSM has several benefits that can be leveraged in order to drive profitability.

  • Tail spend affects every function in the organization including the procurement function. Unlike procurement and sourcing practices, tail spend is an organization wide phenomena and needs to be tackled. It cannot be siloed as a procurement specific issue, but instead it needs an effective management program to address these issues and maintain the internal policies and controls.
  • An effective tail spend management positively impacts the company’s bottom line and results in instant visible savings. This facilitates better spend visibility and improved spend management for the organization. The business instantly enjoys the benefits of an effectively implemented TSM program.
  • It helps in optimizing the organizations supplier base, by combining all the low volume suppliers and enabling the management to focus its spend on fewer suppliers. This automatically reduces costs such as transaction expenses, process and storage costs. TSM facilitates a better supplier relationship management and helps the organization to retain suppliers who positively contribute and deliver value to the organization.

Tail spend management has multiple benefits that can drive the organizations profitability and enhance spend visibility, help in allocating funds and making strategic business decisions. At SpendEdge, we assist organizations to identify their needs, monitor their tails pend and thereby reduce procurement costs by using our tail spend management methodologies and help them in devising effective strategies to drive cost savings.

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SpendEdge’s Procurement Market Intelligence Helps a Global Media Agency

Category Overview

Furniture and furnishings play an important role in the interior decoration industry, as they not only provide comfort but also help enhance the aesthetic appeal of indoor and outdoor spaces. They are also used to make a statement pertaining to creativity and individuality. Currently, modular and ergonomically designed products are in most demand among buyers as workspaces are shrinking and there is increased awareness regarding health issues arising from long working hours spent in seated positions.

 The Procurement Pain Point

One of the leading media agencies was relocating to a new office and was facing challenges negotiating contract terms and conditions and pricing with the furniture suppliers. The client approached SpendEdge to carry out a market intelligence study to help them with better supply market insights, pricing models, cost-saving opportunities, and the latest trends in procurement. Further, the client wanted a detailed analysis of the suppliers’ operational and functional capabilities, benchmarking standards, and major regulatory framework.

Procurement Insights Offered and the Outcome

To provide a better understanding of sourcing and procurement best practices, SpendEdge deployed a team of analysts to perform a detailed procurement market intelligence study on various aspects of procurement market including category spends, major growth constraints, strategic sustainability practices, and category risk evolution. Our analysts carried out in-depth research comprising of primary and secondary research methodologies backed by quantitative and qualitative data analysis. Our team of analysts referred to a large database of secondary resources and carried out detailed discussions with the industry leaders, client consultants, procurement heads and managers, and client account heads to get a better perspective of the category, service level agreement terms, and category negotiation strategies.

Business Impact

This study offered the client with a better understanding of the supply market which helped them identify the best-suited furniture and furnishings supplier. Moreover, our solutions helped the media company devise effective price negotiating strategies and supplier engagement models.


This case study offers comprehensive information on how our supplier market intelligence engagement helped a global client understand the furniture and furnishing industry.

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Supplier Risk Assessment Helps a Leading Medical Device Company Foresee Potential Risks

The Procurement Pain Point

To realize the risks associated with the supply chain, the client – one of the leading medical devices manufacturers with offices and facilities in more than 50 countries across the globe – approached SpendEdge to commission a supplier risk assessment study focused on conducting periodic risk monitoring specific to a select set of suppliers. This supplier risk assessment engagement also helped the client gain regular updates on the performance, news andCapture happenings specific to the key suppliers and also stay informed of the latest developments of the supply market to the healthcare industry.

The primary objective of this engagement was to help the client gain a comprehensive picture of the critical suppliers, which, in turn, helped them in developing a robust supplier strategy. The key was to monitor critical suppliers on an on-going basis and help the category managers foresee any potential risk. Additionally, this supplier risk assessment study also provided detailed information about all the suppliers including details about the parent and subsidiary companies, key executives, product portfolio, and financial announcements.

To meet the specific requirements of the clients in the healthcare sector, SpendEdge’s team of procurement intelligence experts adopted a blended research methodology of qualitative and quantitative research followed by data analysis and supplier specific insights development. Furthermore, to understand the growth of the market over the short- and long-term, our supplier risk assessment experts also reached out to industry stakeholders and members of trade associations.

Procurement Insights Offered and the Outcome

To cater to the specific needs of the client, SpendEdge deployed a dedicated team of risk monitoring and assessment experts who worked directly under a project manager with significant experience in conducting and managingCapture supplier risk assessment assignments. To develop procurement insights specific to the suppliers, our procurement market intelligence team followed a blended research methodology of primary and secondary research techniques and was supported by an experienced team of category experts, media monitoring experts, editors, quality analysts, local language experts, and IT and compliance managers.

In a span of just four weeks, SpendEdge was able to aggregate baseline information on all critical suppliers delivering deep dive insights on the supplier performance and risk levels. We also conducted regular monitoring on these suppliers to monitor their activities and foresee any potential risks associated. Additionally, the supplier risk assessment offered by us also helped the client gain a clear visibility of the risks associated with its critical suppliers, and develop timely mitigation strategies to tackle any potential disruption in the supply market.


Key highlights of our capabilities that helped in delivering a robust solution

This case study on supplier risk assessment offers information on how we helped a global medical devices manufacturer understand the risks associated with the suppliers.


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Supply Chain Risk Assessment Solution Helps a Technology Firm Remain Updated on Potential Risks and Minimize Losses

The Procurement Pain Point

To better understand the risks associated with the supply chain, the client –  a multinational technology firm withCapture operations spread across 170 countries across the globe – approached SpendEdge to commission a comprehensive supply chain risk assessment engagement that helped them in obtaining periodic reports and updates focused on tracking and assessing potential supply chain risk factors. The key risk factors considered were around geographies, raw materials or commodities, suppliers, and adverse events. Additionally, this supply chain risk assessment also helped the client remain aware of any adverse event that could result in potential disruption and stay prepared to minimize losses.

The primary objective of this supply chain risk assessment engagement was to offer the client with a dedicated procurement market intelligence platform by deploying high-quality procurement analysts and experts, implementing best-of-breed methodologies and processes, and offering unrivaled research expertise.

With the presence of experienced procurement intelligence units at multiple locations, we support our clients across the globe in minimizing their procurement costs, lead times, and risks on every project through established practices and benchmarking methods. Furthermore, to understand the risk factors associated with the supply chain in the regions under focus, SpendEdge’s supply chain risk assessment experts also conduct frequent interviews and discussions with industry experts as well as key stakeholders.

Procurement Insights Offered and the Outcome

To address the specific risk assessment requirements of the client, SpendEdge deployed a team of procurement analysts with experience in conducting comprehensive supply chain risk assessment studies for a wide array ofCapture clients. By following a blended methodology of interviews and discussions with industry experts and an in-depth secondary research, our procurement experts conducted comprehensive supplier market intelligence and risk assessment assignments. This approach helped the client gain timely granular insights related to potential risks to the supply chain in relation to geographical risks, raw material/commodity supply risks, supplier site related risks, political/labor related risks etc. We also monitored risks associated with terrorism and environmental aspects specific to certain procurement destinations of the client.

With strong expertise in delivering supplier prequalification inputs based on robust research methodologies, our procurement analysts deployed stringent quality surveillance processes and procedures that helped the client understand defects and shortcomings associated with the quality of products delivered by specific suppliers. By tracking the demand for specific commodities, our experts predicted possible changes in the availability and pricing of commodities and also helped the client understand its subsequent impact on their business. In a span of just five weeks, SpendEdge was able to help the client assess the risks associated with the current destinations and suppliers, and to identify alternative optimum sourcing destinations and world class suppliers. This helped them understand current state, foresee potential risks and stay aware of possible ways of mitigating these risks. By analyzing information from various data sources, this supply chain risk assessment also helped the client in designing the right approach to stay prepared to manage potential risks.

Our proposed research framework for this supply chain risk assessment engagement includes

SpendEdge Case Study Solution Graphic Edited
This supply chain risk assessment offers information on how we helped a global technology client identify optimum sourcing destinations and suppliers.


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Simplifying Shopping for Suppliers with Cost Analysis

When dealing with businesses, ‘price’ is considered to be a sum of money that must be paid to acquire a product or service, while ‘cost’ is considered to be the expense that a business is faced with when bringing a product or service to market. The difference between the price of an item and the cost that is incurred to bring it to market is the profit that a business makes when the item is sold.

Deciding on and managing suppliers can be a huge challenge to businesses and to cost management, but can be made much simpler through the process of cost analysis. Supplier cost analysis allows businesses to fully consider the financial impact that choosing a specific supplier will have on their business, the price that they can sell their products or services at, and the profits that they will make.

Understanding a supplier’s cost structure is critical to determining whether or not they are a good fit for your company, as well as whether or not they are giving you a good deal. When undergoing cost analysis, buyers should ask themselves and their potential suppliers these essential questions regarding price before entering into a price agreement:

  1. What are the business’s direct and indirect costs?

Direct costs include things like base salaries, labor, and materials—things that contribute directly to the production of the final product or service. Indirect costs are things that are not directly associated with the product’s production, such as communication and marketing costs, legal fees, and travel. Taking into account all of these costs will give buyers a better and fuller idea of what their finances and future profit will look like, and will make it easier for them to choose a supplier that best fits into their financial picture.

  1. What is the price that competitors are paying?

Knowing what others in the industry are paying for the same services and products will allow the buyers to determine what is considered a fair price in their industry. This will help them to determine and negotiate a price that will allow them to remain competitive and will ensure that they are not overcharged. Comparing the prices of different suppliers in the industry will also allow buyers to have a better understanding of a range of supplier cost structures, making it easier for them to select a supplier that best fits their business and offers the most cost savings.

  1. Does the supplier understand your industry and your business’s needs?

Buyers should ensure that the supplier has expertise in serving their particular industry. Suppliers should fully understand the industry’s dynamics, practices, and trends, as well as the habits of the industry’s customers. They should also understand what a particular business requires from them, just as businesses should have a solid understanding of how the supplier operates and what their business practices are.

  1. What pricing structure best suits the business?

Buyers need to take into account the advantages and disadvantages proposed pricing structure that the supplier is offering them. They should consider whether or not there are discounts involved, if there is room for future negotiation, if bundled pricing is available, and how potential pricing or monetary conflicts between the buyer and supplier will be resolved. Buyers should also take into consideration whether or not the pricing structure will allow them to work effectively with the supplier to reduce waste. Another important factor that should be taken into consideration regarding pricing structure is its potential for flexibility and changing costs of products.





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What to Watch for in the Global Pharmaceutical Industry in 2017

The global pharmaceutical industry is currently volatile, with many opportunities but also several potential setbacks. The market is expected to continue to grow in 2017, with new clinical advancements and a growing need for medicine as the middle class expands in developing countries and the global population ages. However, the high prices of many drugs remain a point of contention in the market, and generic products are a significant source of competition. Companies will have to keep these factors in mind over the coming years.

The growing healthcare industry

The pharmaceutical market is expected to be worth $810 billion in 2017 according to estimates by Euler Hermes, which will be an increase from $780 billion in 2016. Healthcare spending as a whole is currently rising, and will likely continue to do so over the next several years. Many countries are working to expand access to healthcare and provide universal coverage for their citizens. Also, the growing middle class in many emerging economies means that more people can afford medicine and related expenses, when before this would have been more of a luxury. While there are challenges to implementing public healthcare systems, progress is nevertheless being made in many areas.

Mergers and acquisitions (M&A) will continue to rise among pharmaceutical companies. As research and development (R&D) is expensive and requires specific expertise, many organizations are opting to acquire other companies to expand their reach. Aside from gaining knowledge and products in new areas, buying another company is also an easy way to enter a new market. M&A provide a faster, less resource-intensive, and less risky way of growing and meeting new demands. As competition increases, large companies will increasingly seek deals with smaller, more agile ones to keep up with the market.

High drug prices driving demand for generic options

There are a few threats and challenges to the market, however. There is growing concern over pharmaceutical prices, and many consumers see the cost of patented drugs to be far too high. Several governments are placing limits on the cost of drugs and of their health programs, and are attempting to make healthcare more accessible. In line with this, generic drugs constitute significant competition, as they are easier for public healthcare programs and for individuals to afford. As patents expire, sales of those branded drugs are likely to take a hit. Drug makers will need to keep an eye on these factors and look for ways to compensate for them.

What is a threat for some companies, of course, can be an opportunity for others. Patent expiry and the demand for cheaper drugs opens up space for other companies to enter the market and to grow. Innovation remains valuable, especially as larger companies choose to forgo it in favor of acquiring others. Also, developing new drugs will help offset the expiry of old patents, and advancements in the field of oncology should bring new products in the near future.

Despite challenges around prices and economic uncertainty, the global pharmaceutical market will continue to grow over the next year and into the future. M&A will be a prominent strategy, and demand will rise as healthcare programs develop around the world. Innovation and affordability are two strategies with strong potential, and drug makers will need to balance the two in order to succeed in the market.

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