Tag: strategic sourcing

strategic sourcing

Strategic Sourcing: Enabling E-commerce Businesses to Strengthen their Position in Australia

Download this free article to know improving strategic sourcing process can help companies to strengthen their position in the Australian market amid the rising market opportunities.

Globalization of supply chains has made ecommerce giants explore market opportunities in different countries. But at the same time, it has also increased the number of third-party logistics (3PL) providers and co-packing suppliers which is negatively impacting the cost efficiency of companies. They need a strategic sourcing model that can successfully reduce operational costs and improve spend visibility.

The Business Problem

Know how, a $10 billion-plus global leader in e-commerce business engaged with SpendEdge to leverage strategic sourcing to strengthen its position in the Australian region. The client also focussed on building an agile supply chain and improving third-party logistics (3PL) operations to reduce spend on transportation and warehouse management. The key objectives they were looking to achieve through this engagement were:

  • Manage the rising number of suppliers.
  • Improve the supply chain process
  • Reduce operational costs.
  • Track their purchasing budget, stocks, and supply market.

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strategic sourcing

A Leading Steel Company Leverages Strategic Sourcing Solutions to Achieve Annual Savings Of $17 Million

The Business Challenge

A leading steel company, that exhibited a great deal of growth in recent years by acquiring other steel organizations, was facing problems that were common to enterprises that employ mergers and acquisitions as a growth strategy. The acquired companies lacked common item codes and offered tremendous scope for streamlining processes. This compelled the company to collaborate with SpendEdge and achieve better cost savings in indirect and MRO spend. The target set by the company to reduce sourcing costs was 15% since for organizations like them, this reduction constitutes a considerable sum.

Apart from this, the company was looking forward to improving their overall efficiency, maximizing their financial performance, and driving product innovation by implementing a competitive global strategic sourcing process. The key objectives they were looking to achieve through strategic sourcing were:

  • Control spend data by having an organized system in place for their parts information to avoid any hidden charges.
  • Determine the cost structure of suppliers, have a strong sense of the market situation and implement strategic purchasing.
  • Optimize cost savings by reducing reliance on tier 1 suppliers(direct suppliers).

Controlling spend data can maximize the financial performance of companies. Request a free proposal below and access our complete portfolio of strategic sourcing solutions.

Solutions Offered

The experts at SpendEdge obtained detailed market intelligence information on the supply market and supplier landscapes from different plants and suppliers. They tracked activities and innovations to help the client understand best sourcing and category management practices and develop robust strategic sourcing process. The information gained, therefore, enabled them to deploy the right sourcing strategy and negotiate more favorable terms with suppliers, taking advantage of the client’s significant economies of scale.

Deployment of strategic sourcing strategies led to the creation of cost optimization models for key categories that helped the client to identify sellers that quote width adders in intervals. Parts with widths close to a larger interval category can be sourced less expensively if the coil width is increased to the breakpoint. This helped the client to increase savings potential by smartly using the excess material for offal utilization.

SpendEdge’s strategic sourcing strategy further allowed the client to manage risks such as resale programs and hedging. This ensured secure supply at better managed costs for the client. Such resale programs offered better savings by attracting suppliers that offer favorable pricing. The strategic sourcing strategy filled up the capacity in the value chain and enabled the client to negotiate lower pricing for value add processing through the intermediate steel processors.

The strategic sourcing strategies evaluated options of buying from different suppliers or from different plants from the same supplier for the client. This helped the client to re-allocate the processing to a low-cost producer in the value chain.

Wondering how following a strategic sourcing approach can benefit organizations?

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Key Findings

Streamlined the Procurement Process

In a span of one year, the strategic sourcing process developed by experts at SpendEdge streamlined the procurement efforts of the client. This enabled them to save between 15 and 20% depending upon the category and accounted for an annual savings of $17 million a year. The number of suppliers reduced significantly, which streamlined numerous operations while reducing costs for the client. Also, it helped in developing mutually beneficial strategic alliances with individual suppliers.

Enabled the Usage of Mini-Mills

The strategic sourcing solutions rendered further helped the client to shift volume to suppliers in other countries and import that steel at low enough prices to stay competitive despite higher transportation costs. They gained detailed insights to increase the usage of mini-mills to create more leverage in the steel purchasing process. Mini-mills offered competitive pricing as transportation costs are low and profit margins considerably high.

What is Strategic Sourcing and Why is it Important?

Strategic sourcing is an organized and collaborative approach adopted by organizations that formalizes the way information is gathered and used for strategic purchasing. It leverages targeted spend across locations with selected suppliers that are best suited to creating knowledge and value in the customer-supplier interface. 

Strategic sourcing enables organizations to take advantage of innumerable benefits while focusing on their core competencies. It mitigates risk, enhances the quality of goods and services, ensures timely delivery of goods and services, reduces costs, and improves supplier relationship. The key reasons for adopting strategic sourcing best practices are:

  • Quality of Supplies: Strategic sourcing strengthens relationships with suppliers and ensures timely supplies of materials. It results in quality improvements and streamlines the procurement process
  • Cost Reduction: Strategic sourcing solutions help companies to negotiate lower unit prices for high-volume purchases, thus, maintaining a competitive pricing of their products. Also, strategic sourcing strategies allow management to focus on core activities.
  • Risk Management: With a strategic sourcing process, companies can proactively identify and resolve problems pertaining to suppliers. This can reduce supply chain disruptions considerably.

Implementing strategic sourcing best practices helps companies to mitigate risks and enhance the quality of goods and services.  Get in touch below and know how our experts can help you in implementing the same.

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How Can a Cost-effective Strategic Sourcing Process Benefit Companies?

Strategic sourcing process

Even now, many companies consider purchasing to be simple and merely a means to an end. The key aim of any procurement team is to meet the financial requirements while minimizing costs for their organization. Most teams, therefore, pitch competing suppliers against one another to cut purchasing costs. This hardly gives companies any scope to formulate an effective procurement strategy and build goodwill among suppliers. As a result, companies find it challenging to implement a strategic sourcing process and improve their overall purchasing efficiency. Following this traditional purchasing approach results in a lack of visibility, missed opportunities, and cost synergies for businesses. The absence of a strategic sourcing process also hampers the quality of products and negatively impacts the decision-making process.

At SpendEdge, we understand the impact that following a cost-effective strategic sourcing process can have on your business. And to help sustain profitability, our team of experts has highlighted some of the key benefits of following a strategic sourcing process. Though knowing more about the key benefits of a strategic sourcing process can help businesses achieve significant cost-savings, let’s first understand why companies need it and the impact it can have on your business. (more…)

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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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Spend Analysis : Assessing the Current Spend and Improving Supply Chain Efficiency for a Medical Devices Company – SpendEdge

Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs

About the Client 

The client is a leading medical devices company, specializing in the development of medical devices, laboratory instruments, and diagnostic products. The company supplies devices to hospitals, laboratories, and clinics worldwide. The company has ingrained its place as a leader in the medical devices market.

The Business Challenge 

The future looks sharp for the medical devices industry. With global economic growth, innovations and an aging population that has a growing need for healthcare, revenue for medical devices is poised for growth. However, in this turbulent environment, companies that can shift their supply chain priorities and better manage spend will be able to deliver significant value. Moreover, the rising need for supply management and strategic cost management have urged players in the medical devices manufacturing space to leverage the use of robust spend analysis solutions. Spend analysis solutions help companies in the medical devices manufacturing space to identify the potential opportunities and deliver actionable insights into the spend data to generate improved ROI. The spend analysis solutions also address concerns about the maverick spends across the supply chain and help achieve superior supplier relationship efficiently.

The client, a renowned medical devices company was facing challenges in reducing the cost across the supply chain and managing their tail spend. While public spending has become endemic, the client realized the need to drive more competitive pricing. Moreover, the client’s objective was to adopt spend analysis strategies to identify and optimize their spend areas. Additionally, the client needed to streamline their supply chain management and subsequently maximize profits by leveraging SpendEdge’s spend analysis solutions.

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