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SpendEdge’s Supplier Cost Analysis Solution Helped a Construction Equipment Manufacturer to Identify $7 Million in Savings

US Construction Equipment Industry Overview 

The construction equipment industry in the US produces equipment for residential, nonresidential, highway and other infrastructure construction. Demand for industry products is based on the levels of private construction spend and infrastructure projects. However, the US construction equipment industry is highly globalized and susceptible to changes in global economic conditions. In recent years, the industry has been challenged by the appreciating US dollar and exchange-rate dynamics.

Business Challenges Faced

The client, a subsidiary unit of a large construction equipment manufacturer had a distinctive business model than other units. Large equipment subsidiaries of the parent company sold high revenue products with minimal competition, allowing them to bear higher overheads. However, the client sold high volumes of smaller and low priced machines with the lean competition.

During China’s slump and government’s trade war, the client came under high pressure from the parent company to reduce the cost of goods sold (COGS). Since purchased parts constituted most of the client’s COGS, it realized the need to reduce the direct material spend. However, it required delivering a greater amount of value to suppliers without asking for price reductions or hampering supplier relationships.

Want to know how performing supplier cost analysis can help you make informed purchasing decisions? Request a free proposal and we will get back to you with customized supplier cost analysis solutions. 

 

Our Research Approach

To address the specific needs of the client, the supplier cost analysis team at SpendEdge adopted a three-phased approach. The first step involved economic costing in which a top-down analysis of supplier prices was carried out by the experts based on the financial statement from suppliers and their industry comparable. Historical trend modeling was performed in the next step to examine the changes in costing inputs such as raw material, energy, overtime vs. historical supplier pricing. Finally, the best cost modeling techniques were identified based on the supplier’s unique products.  

With the supplier cost analysis solution, the client created three independent assessments and provided a verified, triangulated cost that can be trusted by suppliers as a solid data point. They gained a detailed understanding of the various components and identified potential suppliers to procure products and services at the right prices.

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Engagement Outcome 

The comprehensive supplier cost analysis helped the client to analyze over 50 suppliers accounting for $200 million of OEM spend. This helped the client to identify $7 million of extra profit apart from identifying several other cost savings opportunities. Within a short span of time, the client became one of the most profitable divisions in the parent company.

Conducting supplier cost analysis is crucial for companies to better negotiate with suppliers. Subscribe now to access accurate supplier cost analysis insights from our procurement experts. 

How to Perform Supplier Cost Analysis? 

  • Develop a supplier cost analysis template that can cover direct and indirect costs along with the inflation/expansion costs.
  • Calculate benefits such as reduced taxes/fees and increased output. 
  • Collect the discrete cost and benefit numbers to determine the net result on cash flow over time.

To know how you can successfully perform supplier cost analysis, request for more information from our analysts.

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Growing Transmission and Distribution Network Driving the Demand for High Voltage Capacitors

SpendEdge Procurement Market Intelligence InfographicsLondon, May 16, 2018: Factors such as rapid industrial development across emerging markets and growing transmission and distribution network worldwide have subsequently increased the demand for high voltage capacitors. In terms of applications, high voltage capacitor is majorly used in bulk power transmission as it helps to reduce transmission losses. The adoption and implementation of a technological upgrade in the power market has enhanced the efficiency of high voltage capacitors and improved the end-user experience, which drives the market growth

SpendEdge’s latest procurement research report on the global high voltage capacitor market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the electrical component, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“High voltage capacitors are used in diverse end-user industries such as power supplies, power transmission and distribution, drive systems and inverters, motors, oil and gas electronics, and medical electronics. Further, high voltage capacitor demand is relatively strong in smartphones, tablet, automotive electronics, and computers, which is anticipated to drive the market growth.” – Tridib Bora, electrical components expert at SpendEdge.

Reliability of high voltage capacitor is important to ensure their safe operation. Buyers conduct several tests to check the reliability of capacitors. Therefore, buyers/suppliers must check various documents published by international and national bodies such as International Electrotechnical Commission as they enumerate guidelines regarding the reliability of capacitors.

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This procurement report on the high voltage capacitor market offers insights on:

  • Supply markets, growth drivers, trends, and imminent restraints
  • Key suppliers and assessment of their capabilities
  • Procurement best practices
  • Negotiation strategies and cost-saving opportunities
  • Pricing models and category innovations
  • For a comprehensive, detailed list, view our full report

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IR27

Growth of Consumer Electronics and Automobile Industry Driving the Demand for Low Voltage Capacitors

SpendEdge Procurement Market Intelligence InfographicsLondon, May 14, 2018: Telecommunications, consumer electronics, and automobile electronics segments will contribute 40%-53% of the rise in incremental spend in the low voltage capacitor market. This incremental spend is primarily driven by the demand from the APAC countries, especially India and China. Due to such incremental spends, the APAC region is expected to dominate the market by 2025.

SpendEdge’s latest procurement research report on the global low voltage capacitor market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the electrical component, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“Proximity to electronic component manufacturing facilities and the subsequent supply chain related cost savings and huge market potential for the growth of end-user industries such as smartphones are compelling buyers in North America and Europe to establish manufacturing facilities in these regions. This is directly driving the growth of this market.” – Tridib Bora, electrical components expert at SpendEdge.

Buyers can enter into a strategic research partnership with suppliers for enhancing end-product functionalities and quality. In such research partnerships, suppliers agree to supply the newly developed product at a lower price to the buyers, while the same products are sold at a higher price in the market. This way, entering into strategic research partnerships with suppliers for developing products that will meet specific requirements is one of the best procurement practice.

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This procurement report on the low voltage capacitor market offers insights on:

  • Supply markets, growth drivers, trends, and imminent restraints
  • Key suppliers and assessment of their capabilities
  • Procurement best practices
  • Negotiation strategies and cost-saving opportunities
  • Pricing models and category innovations
  • For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Get access to our reports to gain insights, platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now


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IR14

A Procurement Overview of the Pharma Clinical Trial Services Market

The modern medicine owes its success to numerous clinical trials that took place to result in the perfect drug discovery. As a result, there has been an emergence of pharma clinical trial services, that deals with clinical research, wherein evidence-based trials are utilized to establish treatment, to be later used in the healthcare industry for treatment of patients. In the field of clinical research, the efficacy and safety of medicines, diagnostics, devices, and therapeutic regimens are tested for their subsequent successful use in the treatment of human diseases and conditions. Such clinical trial services are mainly provided by CROs that work for pharmaceutical, biotechnological, and medical device companies. Such companies provide them with solutions pertaining to new drug development, biological assays, and preclinical and clinical research. With pharmaceutical companies aggressively trying to discover new and effective drugs, the global spend in this category currently stands at $33.2 billion. (SpendEdge Procurement Market Research)

Request Free SampleMajor category requirements in pharma clinical trial services market

One of the major requirements from the service provider in this space is their ability to provide quality assurance. To offer quality assurance service providers should adhere to ICH & GCP guidelines, ISO certification, GMP compliance, IRB and IEC approvals, US FDA regulations, Internal QA audits, and SOPs. It is essential as clinical trials deal with testing on humans, which can be an ethical and legal issue in case of any malfunction during the trial of new drugs. Additionally, they should also be able to assist pharma companies in site allocation and patient recruitment for the efficient functioning of clinical trials.

Procurement challenges

It’s a common practice in pharma industry to engage with multiple service providers to obtain different services related to a trial. For instance, they may choose to engage with different providers for design optimization services and clinical laboratory services. However, the problem with engagement with multiple suppliers is that it can lead to inconsistency in the quality of services and also make it difficult in maintaining communication with CROs on a regular basis. Additionally, it also increases administrative costs associated with monitoring and managing multiple CROs and requires longer time-to-market for the new drug.

Procurement best practices

Although problems may arise when dealing with multiple partners, it is essential to maintain strategic relationships with them for optimal result. Companies should look to develop strategic and long-term partnerships with selected providers. Furthermore, pharma companies must also try to adopt the policy of insourcing by placing some of the employees from CROs at their premises. It not only helps CROs to gain better insights into buyers’ culture and facilitates but also better understand the process and communication between both the parties.

Suggested pricing model

One of the best pricing model favorable for consumers in this market is pay for performance pricing model. One of the most common pricing model adopted in this sector is that of pricing based on task completion. However, pay for performance model can provide incentive terms for CROs to focus on delivering the result. Furthermore, pharma companies can rather adopt pricing terms based on KPIs.

Price saving opportunities

Adoption of mHealth technologies has helped service providers to utilize portable platforms for capturing real-time data, which helps in achieving cost savings by reducing efforts for manual follow-up of patients. Additionally, adopting big data and could technologies also reduce data storage cost and saving companies valuable resources.

Read more about the procurement overview of the pharma clinical trial market along with procurement best practices, supply market landscape, pricing models, and technological advancements in SpendEdge’s upcoming report on the global clinical trial services market.

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IR14

Frequent Changes of Oil Filters in Plant Machinery Driving the Demand for Oil Filters

SpendEdge Procurement Market Intelligence Infographics (1)London, May 07, 2018: Several large organizations are looking to reduce the operational costs associated with plant machinery. This is leading to installation oil filters in the machinery and engines at operational facilities as they enhance the efficiency of the machinery and obtain cost-benefits by optimizing the total usage of oil. As a result, the global spend on the oil filters category is on the rise.

SpendEdge’s latest procurement research report on the global oil filters market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the materials, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“Suppliers in the global oil filters market have high growth opportunities to set up their operational and distribution facilities in APAC due to the rapid growth of end-user industries in the region” – Angad Singh, materials expert at SpendEdge.

Buyers need to adopt demand management measures in collaboration with the supplier, which will help to streamline the production and inventory process at suppliers’ operational facility. This will help to minimize the TCO and reduce the overall procurement costs.

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This procurement report on the oil filters market offers insights on:

  • Supply markets, growth drivers, trends, and imminent restraints
  • Key suppliers and assessment of their capabilities
  • Procurement best practices
  • Negotiation strategies and cost-saving opportunities
  • Pricing models and category innovations
  • For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Get access to our reports to gain insights, platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now


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Cost Model Analysis: How it Helped a Leading Alternative Energy Company to Understand the Key Cost Elements Across Their Supply Chain

Overview of the alternative energy industry:

Alternative energy sources are renewable sources of energy. It can be defined as any non-traditional source that meets the energy needs of consumers. Also, they do not cause any undesirable changes to the environment. To meet the growing energy needs of the global population, several researchers around the globe are focusing on developing and discovering new alternative energy sources.

Traditional sources of energy include fossil fuels, such as oil and natural gas, whereas alternative energy sources are those that do not require the use of fossil fuels. Although most alternative energy sources are considered renewable, a few are non-renewable. Alternative energy sources used for generating electricity include solar energy, wind energy, and geothermal request free proposalenergy sources. However, the leading alternative energy source for transportation fuel is biofuels, with ethanol leading the market.

The different sources of alternative energy include:

  • Solar Energy
  • Hydroelectric Energy
  • Biomass Energy
  • Wind Energy
  • Tidal Power
  • Geothermal Energy

The Business Challenge and Journey

The client, a leading player in the energy industry, specializing in the alternative energy segment was looking at leveraging SpendEdge’s cost analysis solution. The client wanted a detailed outline of the potential risks and gains in the alternative energy industry.

The company’s supply chain management executives recognized the tremendous benefits of leveraging SpendEdge’s cost analysis solution. As such, they were developing the lowest possible cost mix using our cost analysis solution. Moreover, the client wanted to gain detailed insights and recommendations that will help them achieve the lowest possible cost mix.

To identify challenges in supply chain functions, the cost analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the alternative energy industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.

Fundamental questions answered in this cost model analysis study include:

Alternative Energy


The Result

SpendEdge’s cost analysis solution offered relevant insights that helped the alternative energy industry client in identifying the essential cost elements across their supply chain. Moreover, with the help of our cost analysis solution the alternative energy firm was able to determine the ability of their current cost model and tools to meet stakeholder’s needs for calculating and comparing financial data across their business segments.

Why should you leverage cost analysis?

Cost analysis is a practical approach to evaluate the strengths and weaknesses related to organizational spend. It helps in determining the best approach to achieve maximum benefits while improving overall savings.

Alternative energy industry trends:

  • Growth of the electric vehicles marketThe electric vehicles market is growing rapidly across economies. The drop in battery costs and affordability are driving the widespread use of electric vehicles. This enables the development of new energy stability solutions, including wind-solar hybrid generation, grid management using utility scale batteries, and plausible alternative power storage options such as pumped hydro or a gas grid to create an adequate balancing mechanism.
  • Change in primary energy demandAn unprecedented drop in the cost of clean energy production has occurred in the last couple of years. Solar energy and wind power generation have undergone an annual average percentage drop in the cost of production.  Moreover, owing to the affordability, use cases of alternative energy have broadened. Alongside electricity production, it is also offering new and enhanced solutions for mobility and energy security worldwide.

    To know more about our cost analysis solution solutions for the alternative energy sector firms

    request free proposal


IR3

An In-depth Insight into the Global Pesticides Market

The world population has been growing at a rapid rate. To cater to the demands of the population, the food supply in the world has to grow proportionally. The problem is that the arable land is limited, so people have to rely on efficiency gains to meet the world’s food demand. Insects, weeds, and pests destroy a majority of the crops. Pesticides are extensively used to control the spoilage of crops against pests. Pesticides are used to preserve the crops and food from harmful pests during the production, processing, storage, or transport process. The rising demand for weed management has led to the growth of the herbicides segment, which is the largest segment in the global pesticides market. Herbicides are extensively used to control weed growth in crops.

Request Free SampleLargest pesticide market

The APAC region is the largest market for pesticides, accounting for a market share of about 49%. The market is expected to grow at a CAGR of about 7% in the region. The consumption in this region can be attributed to the use of pesticides in regions such as India, China, and Japan. These regions require a high amount of pesticides as it is the leading producer of rice, wheat, and vegetables. The regional market is expected to reach nearly $23 billion by 2022. Additionally, continuously evolving technology and advances in the agriculture industry are encouraging farmers to engage in effective pest management, which, in turn, has resulted in the increased use of pesticides.

Global supply

The supply market for pesticides is controlled by few major players such as BASF, Bayer, DowDuPont, and Syngenta. Smaller players are also making an impact in this market by increasing their production capacities in North America and Africa. Suppliers are using proprietary manufacturing technologies to enhance the quality of pesticides and increase automation of production processes. Leading suppliers are also focusing on the adoption of technologies such as process analyzers to enhance quality control and improve the performance of pesticides.

Top 3 exporters of pesticides

  • Germany: US$4 billion (13% of global exports)
  • China: US$3.7 billion (12% of global exports)
  • The US: US$3.4 billion (11.1% of global exports)

Market developments

One of the most fascinating trends seen in this market is the use of GM technology to provide disease or insect resistance in crops. It can either work by making the plant immune to certain pesticides so it can be used in huge amounts without the harmful side effects or be resistant to the pests itself. However, the GM technology is heavily regulated, and suppliers using DNA technology are legally required to assure the safety and quality of the product before it enters the food supply.

Market challenges

The environmental impact of pesticides is one of the biggest talking points in the world right now. Some pesticides have been proven to be harmful to the humans, and use of such chemicals can lead to the pollution of freshwater, which releases carcinogens and other poison into the ecosystem. As a result, the use of pesticides will be less in the future. Additionally, people are refraining from using foods grown using pesticides and opting for organic food.

Procurement challenges

There has been significant volatility in the prices of raw material in the pesticides industry. The price volatility poses challenges for organizations in predicting their procurement budgets. Lack of knowledge on price fluctuations can be disadvantageous for buyers as it results in the buyer paying more than the market price due to contractual obligations. However, to save against such price fluctuations, buyers can implement a contract clause that provides an upper limit on pesticide prices.

Read more about the supply market landscape in the pesticides market along with supply market insights, procurement challenges, category management, and pricing models in SpendEdge’s upcoming report on the global pesticides market.

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IR15

Use of Industrial Valves in Oil and Gas Industry Driving the Global Demand

SpendEdge Procurement Market Intelligence InfographicsLondon, Apr 17, 2018: The rise in investments in the application industries such as oil and gas are expected to drive the demand for industrial valves. The demand for industrial valves used in oil and gas industry is expected to grow at a CAGR of 6%–7% during the forecast period due to the establishment of new pipelines and operational refurbishment of oil refineries. In addition, increase in investments in wastewater management by application industries across the globe is expected to drive the demand for industrial valves.

SpendEdge’s latest procurement research report on the global industrial valves market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the facility management, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“Industries across the globe are aiming at achieving operational excellence in terms of monitoring and controlling of equipment used in manufacturing and production processes through real-time data analysis and remote access. This is leading to replacement of conventional industrial valves with technologically advanced industrial valves, such as energy-efficient valves, automatic control valves, and smart valves.” – Bhuvaneshwari Udayakumar, facility management expert at SpendEdge.

Buyers find it challenging to select suppliers based on LCC analysis, which is one of the main procurement practices. In general, plant facilities consist of a significant number of legacy equipment, which affects the operational efficiency of industrial valves. As a result, issues in the assessment of LCC during procurement is causing problems for sourcing teams in this market.

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This procurement report on the industrial valves market offers insights on:

  • Supply markets, growth drivers, trends, and imminent restraints
  • Key suppliers and assessment of their capabilities
  • Procurement best practices
  • Negotiation strategies and cost-saving opportunities
  • Pricing models and category innovations
  • For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Get access to our reports to gain insights, platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now


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IR4

Demand-Supply Landscape of the Claims Management Software Market

Damages, accidents, and mishaps are part and parcel of life and occur quite often. People may accidentally cause damage to someone else’s property or find that their own property is damaged. Fortunately, most people and organizations would have their property and possessions such as house and car insured. Additionally, insurance can include life insurance and travel and third-party liability insurance as well. In the case when the loss arises due to any events, it’s up to the loss adjuster or claims manager to settle claims as quickly and efficiently as possible. Claims management software assists claims manager by automating end-to-end claims process, including planning, monitoring, and managing actions that arise due to insurance claims. The market for claims management software is increasing with the subsequent growth of the global insurance market.

Request Free SampleGlobal demand for claims management software

The demand for claims management software is strongly driven by the robust growth of the global insurance sector and the increasing focus of insurance companies to provide a better experience to their customers during the claims management process. Moreover, cloud-based deployment is being preferred by the buyers across the world as it provides them with convenience and cost savings. Additionally, they are also demanding solutions that offer real-time tracking and analytical capabilities. Such capabilities help them reduce claims leakage and their operational costs as well.

Global supply scenario

The supply market for claims management software is relatively fragmented. The market has numerous global players who offer software packages and enterprise solutions to companies all over the world. Additionally, there are multiple regional players as well who cater to the specific needs of buyers within a geographic region. To grow and gain a competitive advantage, suppliers are continually adding new functionalities to their software and integrating advanced technologies such as AI, predictive analytics, and machine learning. Suppliers are also seeking to offer customized solutions and value-added features to their core product. One exciting trend seen in this market amongst suppliers is the fact that they are shifting their business processes to developing countries as they have greater accessibility to a skilled workforce and can also save on labor costs.

Technological trends

The claims management software market has witnessed a rapid rise in the adoption of AI in claims processing. AI technologies dramatically reduce the number of errors associated with manual claims processing procedures and also expedites claim processing. For instance, AI is being used in the form of chatbots to receive the first notice of loss (FNOL) from the consumers. Upon receiving the claim, the chatbot engages with the client to understand its claims and provides initial assistance. Additionally, predictive analytics is also used by companies to study the characteristics of historical claims and identify patterns that allude to fraudulent claims. This technology is also being used to generate fraud risk profiles of clients that show characteristics similar to historical fraudulent claims.

Pricing in the claims management software market

Sellers price their solutions using either consumption-based, perpetual license, or subscription-based models. Currently, subscription-based model is the widely used pricing model in this market. Buyers are willing to engage with suppliers with subscription-based payments as it involves low upfront costs, and buyers can easily switch suppliers in case their expectations are not met.

Top 5 claims management software providers

  • SAP
  • DXC
  • Oracle
  • Accenture
  • IBM

 

Read more about the demand and supply market landscape of the claims management software market along with procurement insights, supply market landscape, pricing models, and technological advancements in SpendEdge’s upcoming report on the global claims management software market.

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