Tag: supplier cost structure

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Know Your Market: Industrial Gearbox Sector

Gearboxes are widely used in various fields for a wide range of application. As a result, there are numerous kinds of industrial gearboxes, all with their own unique mechanisms, features, and functions. Gearboxes are essential for the functioning of devices and equipment like conveyor belts, elevators, 3D printing devices, mining, and heavy vehicles. The demand for the industrial gearbox is on a rise as automation in end-user industries such as paper, cement, sugar, and steel to reduce operational costs associated with manufacturing facilities are also on a rise. Additionally, many end-user industry buyers are trying to enhance the efficiency of machines and engines at their manufacturing facilities by procuring and installing industrial gearboxes.

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Supply Market Overview: Industrial Gearbox Market

Regional spend

At present, several end-user industries are shifting their heavy manufacturing facilities to the APAC region. As a result, the spend in this market is expected to rise significantly. However, its quite a contrasting case in MEA as most of the buyers in this region are from the oil and gas industry, which uses industrial gearboxes for upstream activities. Rest of Europe and North America are expected to grow steadily as buyers from the renewable energy sector are continuously focusing on increasing the production of renewable energy by setting up windmills, which require industrial gearbox. However, the demand is not stable in those regions as most of the end-user industries located in Europe and North America are shifting their production hubs to APAC to enhance their profit margins.

SpendEdge Insights TrialPricing outlook

With raw material prices on a rise, the pricing of the industrial gearbox is expected to change. Additionally, factors like commodity price fluctuations, the rise in R&D investment, and increase in logistics costs are expected to affect the final pricing. Buyers in this market are opting for a global sourcing strategy to procure high-quality and efficient industrial gearboxes based on end-user industry applications. This strategy involves costs related to inspection, quality assurance, maintaining overseas relations, and hefty tariffs on imports and exports.

Looking for a complete pricing outlook and information on factors influencing costs and category spend? Request a sample

Factors impacting market demand

One of the biggest demand drivers for the industrial gearbox is the requirement for replacements in the manufacturing sector. Industrial gearboxes that are used in end-user industry applications such as manufacturing processes require periodic replacement due to gradual wear and tear. Maintenance of industrial gearboxes is required to improve the efficiency of the manufacturing process. an average replacement can cost around $1,300-$1,600 based on the end-user industry application and the type of gearbox used. Additionally, the continuous evolution of engines and equipment has increased the requirement for advances in industrial gearboxes to enhance efficiency. As a result, buyers of end-user industries are increasingly adopting and installing advanced industrial gearboxes.

Sustainability practices

Suppliers should continuously monitor the amount of waste being generated by their business activities, along with the percentage of recycled waste out of the total waste generated. This includes practices such as monitoring the amount of waste sent to landfills and the percentage of recycled waste. For instance, Siemens recycles more than 75%-85% of the waste generated at its production facilities and thus reduces its volume of waste sent to landfills. Additionally, suppliers are taking initiatives to reduce GHG emissions and water consumption as well.

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Read more about the market outlook of the industrial gearbox market along with procurement best practices, pricing models, supply market insights, and market challenges in SpendEdge’s upcoming report on the global industrial gearbox market.

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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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Overview of the Payments Processing Market

The payments industry has witnessed a significant transformation in the recent years. From handling bundles of cash to using plastic as the preferred payments methods, the payments industry has come a long way. The payment processing industry plays a key role in processing and handling of debit and credit card transactions for organizations. They collect sales information, receive authorizations for transactions, collect funds from the bank, and send payment to the organization. The card payment industry is particularly given a big push by governments across the world with a view to promote cashless payments and mobile wallet. Additionally, rapid growth in the e-commerce sector has led to high penetration of online payment systems in the e-commerce industry, owing to the convenience offered by such payment systems.

Request Free SampleFuture of the market

Since cards are becoming the preferred means of payment, the future looks very bright. Industry analysts from SpendEdge estimate the market to grow at an impressive rate of over 6% annually. One of the main reason behind this remarkable growth is the rise in adoption of POS terminals, mobile wallets, and mPOS in the retail sector. Also, in the future, we may see suppliers of payment processing providing fingerprint scanning systems, allowing merchants to accept payments with the use of fingerprint scanner.

Technological innovations in the market

Contactless RFID credit cards can be considered to be the most significant technological innovation in this market. It allows payment of transactions without any physical contact between the card and the terminal. Contactless RFID credit cards are faster than chip-based and signature credit cards when it comes to processing, convenience, and security. Also, to strengthen the card payment ecosystem, payments processing companies have started to implement EMV technology. In this technology, a microchip is used instead of a magnetic stripe, which provides stronger security; thus, resulting in a reduction of fraudulent activities.

The pricing landscape

So how do these payments processing organization make money? Such companies either employ a transaction-based pricing model or flat-fee pricing. Transaction-based pricing provides transparency in pricing as the charges are based on the cost of each transaction. It also helps buyers in optimizing their expenses. However, in flat-fee pricing, any additional charges are not included, and a fixed fee is set per transaction. This also helps the buying organization in estimating their procurement budget.

Market challenges

The use of electronic payments requires merchants to comply with regulatory standards associated with data protection in terms of cardholder information. For instance, buyers need to comply with PCI DSS to ensure data security for cardholder information. This, in turn, increases merchants’ costs related to the adoption of electronic payments. Also, there has been an increase in the acceptance of infrastructure for electronic payments such as POS terminals within emerging economies. However, the utilization is low due to the lack of interoperability among networks. For instance, as of 2016, around 6 million POS terminals were deployed in Brazil, but the utilization of these POS terminals is low due to the lack of interoperability among networks, restricting the use of electronic payments.

Read more about the market landscape in the payments processing market along with technological innovations, procurement best practices, category management, and pricing models in SpendEdge’s upcoming report on the global payments processing market.

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A Supply Market View into BioPharma Cold Chain Packaging

Biopharma products such as blood components, vaccines, tissues, cells, stem cells, and infectious substances, require safe packaging to endure cold temperatures of the storage containers used to transport them. Safe packaging ensures the safety, sterility, and viability of the biopharma products and specimen inside. Metal, glass, or plastic can be used for biopharma packaging. The growth of the pharmaceutical industry is expected to drive the spending on pharma packaging. The SpendEdge procurement market intelligence report on global biopharma cold chain packaging market estimates the R&D expenditure of the pharmaceutical industry to increase by 3% on an average every year. For the purpose of such research, drugs and clinical supplies require stable cold temperatures, which, in turn, drives the demand for biopharma cold chain logistics.

Request Free SampleLargest market for biopharma packaging

North America is the largest market in terms of consumption of pharma packaging, accounting for a market share of about 30% in 2017. Also, the market is expected to grow at a CAGR of 8.32% during the forecast period. This is mainly because all the major biopharma cold chain packaging companies are present in this region. The region also consists of the largest CROs and pharmaceutical markets across the globe, which are the major end-user industries for the category. Additionally, the market growth has been spurred due to an increase in government R&D spending for drug discovery and therapeutics.

Fastest growing market

In 2017, APAC accounted for 22% of the global market and is estimated to be the fastest growing biopharma cold chain packaging market. Experts have estimated that the market would grow at a CAGR of 10.2% by 2022. This rapid growth can be attributed to the preference for outsourcing bio pharma cold chain logistics activities in this region. This drastically reduces the cost of raw materials in this region, further reducing the cost.

The supply market overview

The supply market for pharma packaging is highly consolidated with major suppliers such as UPS, Allergan, BD, and Amcor dominating the market. Additionally, they are looking to increase their global presence by outsourcing their biopharma cold chain logistics function to offshore regions. Apart from cost containment, they are also looking to improve packaging quality by incorporating latest technology such as using temperature data loggers with wireless communication systems to enable effective monitoring and maintain storage temperatures. To increase their customer base and global coverage, major suppliers from North America and Europe have been increasingly resorting to building offshore facilities in these regions. Suppliers are also focusing on outsourcing their packaging requirements to regional contract packaging organizations.

Regulatory hurdles

Since the bio pharma packaging market deals with delicate products with health implications, companies operating in this market need to have a comprehensive understanding of regulatory hurdles. To receive marketing permits and successfully release products in the market, the packaging solutions are required to undergo initial tests and obtain specific quality certifications from regulatory agencies regarding their safety, performance, and efficiency. The FDA also states that it is the manufacturer’s responsibility to prove the packaging material’s safety and to get approvals before using it for any pharmaceutical product.

Prominent market player

UPS is one of the global leaders in logistics and offers a broad range of solutions, including packaging and freight. The company also provides biopharma cold chain logistics solutions for pharmaceutical companies. Apart from UPS, DowDuPont, Allergan, and AMCOR are also some of the prominent service providers in the pharma packaging market.

Read more about the procurement overview of the biopharma cold chain packaging market along with procurement challenges, supply market insights, pricing models, and regulatory issues in SpendEdge’s upcoming report on the global biopharma cold chain packaging market.

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New Uses of Gelatin Driving the Growth in the Global Pharmaceutical Gelatin Market

SpendEdge Procurement Market Intelligence - Pharmaceutical GelatinLondon, Apr 09, 2018: There has been an increase in demand recently for marine gelatins such as fish gelatin, especially in regions where buyers demand non-bovine sourced gelatins, and in the countries where halal and kosher certifications must be followed. In addition to that, governmental support worldwide in the form of investment and regulatory approval for suppliers in emerging markets such as India has led to the growth of this category.

SpendEdge’s latest procurement research report on the global pharmaceutical gelatin 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 pharma and healthcare, 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.

“In the next two years, the overall consumption of pharmaceutical grade gelatin is expected to grow by 4%-5%. Increase in use of gelatin for pharmaceutical applications can be seen globally due to the discovery of unrealized uses of gelatin including its use in treatment of wounds, therapeutics, and surgical products.” – Bhuvaneshwari Udayakumar, pharma and healthcare expert at SpendEdge.

Most players in the industry procure cattle bones as a primary raw material for gelatin, ban on cattle slaughter in certain regions may affect the entire supply chain. This hampers the supply of bones to major suppliers, which in turn results in price fluctuations of the raw material. As a result, ban on certain raw material sources resulting in price fluctuations is causing procurement challenge in the pharmaceutical gelatin market.

Need more insights on this report?

Request Free SampleThis procurement report on the pharmaceutical gelatin 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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Top Players Dominating the Enterprise Content Management Market

Documents and records are of vital importance in any business enterprise. Business success and operations hinge on the availability of the correct document and records. Enterprise content management ensures that businesses get such digital content when required. Enterprise content management is a set of defined processes, tools, and strategies which allows businesses to efficiently obtain, store, organize, and deliver critical information to its employees, customers, and business stakeholders. It helps companies to streamline the lifecycle of information including image files, documents, CADs, emails, and more. ECM helps organizations build a centralized repository of structured, unstructured, and semi-structured information, which can be accessed later by authorized users. It helps simplify storage, improve security, and provide better control over different versions of documents. The recent surge in the volume of unstructured data has driven the demand in the enterprise content management market. The recent procurement market intelligence report from SpendEdge anticipates the market to grow at of 23%. So which are the top companies that are competing in this growing market?

Request Free SampleTop enterprise content management vendors

IBM

IBM is a multinational technology company having operations in over 175 countries. The company invests 6%-7% of its annual revenue each year for R&D that focuses on high-growth and high-value opportunities. IBM’s Enterprise Content Management (ECM) software suite can capture, analyze protect, activate, and engage with content, both structured and unstructured. Their ECM service includes content management, document capture and imaging, and workflow and case management. The company also offers content management systems (CMS), which is cloud-based. In January 2018, IBM and Salesforce announced the expansion of their strategic partnership to bring together IBM Cloud and Watson services and Salesforce Quip and Salesforce Service Cloud Einstein.

OpenText

OpenText operates in the Enterprise Information Management market and develops enterprise software for digital transformation. The company offers software that assists organizations in finding, utilizing, and sharing business information from any device. The company also helps companies ensure information security. The company offers a host of content management products including applications, solution extensions, product extensions, and industry extensions. In early 2017, OpenText acquired Dell EMC’s content management division making it one of the largest player in this market.

Hyland

Hyland is a software company that develops ECM and process management software suite known as OnBase. This suite finds application in industries such as insurance, public sector, financial institutions, higher education, and healthcare. The company enables organizations to navigate from digital information to digital transformation. Their cloud-based ECM solutions offer multiple deployments, test and sandbox options.

Oracle

Oracle provides products and services that address all aspects of corporate information technology environments, including applications, platform, and infrastructure. The company has over 400,000 customers worldwide, in industries including engineering and construction, healthcare, financial services, banking, public sector, logistics, communication, and life sciences. Oracle offers cost-effective enterprise content management systems encompassing end-to-end content lifecycle management. Their ECM system provides data management, imaging, content publishing, records management, and digital asset management features.

To get a full list on the top vendors in the enterprise content management systems market along with supply market insights, procurement challenges, pricing models, and supplier selection criteria in SpendEdge’s upcoming report on the global enterprise content management market.

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Top 5 Sugar Manufacturers You Should Know About

Sugar is the most commonly used additive that is used as a sweetener in food and beverages. Sugar is also used by key industries such as pharmaceutical, confectionery, and beverages industries. In recent times, the consumption of sugar has been on the rise due to increasing trend of consuming packaged foods and beverages. Additionally, the increased use of powdered, granulated, and syrup brown sugar in bakery items and sweetened beverages is driven by the consumption by the baking products industries in South America and APAC region. The recent procurement market intelligence report from SpendEdge expects the global consumption of sugar to increase at a rate of 2% per annum and reach nearly 200 MT by 2021. Sugar manufacturers are also supplying their products to various industries to manufacture transparent soaps, explosives, color and dyes, and antibiotics.

Request Free SampleTop Sugar Manufacturers Affecting the Market Growth

Suedzucker AG

Suedzucker AG, which started out as Badische Gesellschaft für Zuckerfabrikation, is the world’s first sugar company which was formed in 1837. The company’s core competency lies in the large-scale processing of agricultural materials including sugar. Among one of the leading sugar manufacturers, the company offers a wide assortment of sugar types for baking, preserving, cooking, or as a sweetener. They also provide tailor-made sugar including directly compressible sugars for pharmaceutical applications and crystallized sugar and special liquid varieties for beverage and dairy industries.

Tereos

Tereos, founded in 1932, is among one of the leading sugar manufacturers alongside being a leader in alcohol and starch markets. Being a sugar cooperative, Tereos is focused on the valorization of agricultural raw materials and development of quality food products. They supply sugar in consumer markets with renowned brand names such as Guarani in Brazil, Béghin Say, La Perruche, Blonvilliers and Ligne Sucre & Stévia in France, TTD in the Czech Republic, and Bourbon in Réunion. The company boasts a comprehensive product portfolio, which includes household sugar, industrial crystallized sugar, liquid and fondant sugar, fructo-oligosaccharide, and sugar for industrial facilities.

Cosan

Cosan is among the leading sugar manufacturers that supplies most of its sugar for ethanol fermentation. It started its business off in the sugar and ethanol industry and subsequently expanded its business in agriculture, fuel and natural gas distribution, and lubricants and logistics. The company also owns various sub-brands such as Raizen, Comgas, Cosan Lubricants, Radar, and Rumo.

Associated British Foods

Associated British Foods is an international food, ingredients, and retail group that aims at providing quality products and services with a high degree of autonomy. The company groups its businesses into five segments namely, sugar, agriculture, retail, grocery, and ingredients. Among one of the most profitable sugar manufacturers, the company reported an operating profit of US$1.4 billion in the year 2016. Leading brands such as Primark, AB Sugar, AB Agri, SPI Pharma, Allied Mills, Twinings, Westmills Foods, and Ovaltine are all owned by Associated British Foods.

Mitr Phol Sugar

Mitr Phol Sugar is the leading sugar manufacturer and exporter and also the fifth biggest sugar manufacturer in the world. The Thai company was formed in 1946 and has its production bases in China, Thailand, Laos, and Australia. Sugar, molasses, fertilizer, and wood substitute materials constitute key product bases for the company.

CTA view full reportRead more about the top sugar manufacturers along with sugar suppliers, sugar industry, pricing strategy, sourcing models, and supplier evaluation criteria in SpendEdge’s upcoming report on the global sugar market.

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Top Incident and Emergency Management Software Providers Dominating the Market

Organizations work tirelessly to optimize their strategies to improve their business performance. No matter how hard and smart they work to improve their performance, certain external factors are out of their control and could adversely affect their business. Adverse situations such as environmental or natural calamities, terror strikes, infrastructural hazards, and extreme events can cause loss of operations, assets, and workforce. As a result, leading companies are proactively preparing for such incidences with the help of incident and emergency management solutions. Such solutions provide standardized emergency response procedures across different public and private organizations by using various software, systems, or equipment. Incident management solutions include perimeter intrusion detection solution, access control solutions, video surveillance system, and cybersecurity solutions.Request Free Sample

The recent procurement research report from SpendEdge recognizes increasing adoption of GIS technology to support quick damage assessment as a popular trend in this market.

Top 5 Incident Management and Emergency Management Solution Providers

Lockheed Martin

Lockheed Martin, a global security and aerospace company, was formed after a merger between Lockheed Corporation and Martin Marietta in 1995. The company provides incidence management solutions such as perimeter intrusion detection, video surveillance, and fire systems. In 2009, Lockheed Martin provided the EPA support during environmental emergencies including oil spills and uncontrolled hazardous waste release by quickly assessing the situation, making suggestions for containment and assisting with remediation activities. Recently, it also received a US$900 million contract from the US Air Force to develop technologies for a long-range missile program.

Honeywell

Honeywell International is an American multinational conglomerate company that builds technologies and solutions to provide services across security, safety, and energy sectors. Their product portfolio also includes incident management and emergency management solutions. Their Command and Control Suite software integrate facilities management by setting up a command wall to control, connect, and collaborate workflows. It also helps to manage, contain, and control risks by making right decisions when a critical incident occurs and thereby guides users through emergency situations. In 2016, Honeywell completed a city-wide installation of surveillance and emergency response technology in Ujjain, Madhya Pradesh, India, to support the police department in crime prevention, and traffic and crowd management during the Simhastha Kumbh, world’s largest holy gathering.

Siemens

Siemens is a German company headquartered in Berlin with operations across different sectors such as power generation, transmission, distribution, technology, innovation, and manufacturing. Its software solutions for emergency and incident management include solutions for sports and entertainment venues, EHS management system, Siveillance ELS Web, and Global Technical Access Center (GTAC) incident report. The company reported revenues of about US$28.49 billion for the year 2016.

Motorola

Motorola, formerly an American telecommunications company, was divided into Motorola Mobility and Motorola Solutions. Motorola Solutions provides various incident management software including PremierOne CAD, PremierOne Mobile, CAD to Radio Messaging, Spillman Flex, Spillman Nova, and PremierOne Responder Location. In 2015, Motorola Solutions acquired Emergency CallWorks, a privately held leading provider of Next-Generation 9-1-1 call-taking software for public safety.

Rockwell Collins

Rockwell Collins is an American multinational company that provides aviation and high-integrity solutions for commercial and military sectors. They also offer integrated systems for mobile platforms, simulation and training services, navigations and situational awareness, and flight deck avionic solution. As of 2016, the company employs 19,000 people and generates annual revenues of US$5.26 billion.

Read more about the top emergency and incident management service providers, along with incident management software, emergency management solutions, cost modeling, SLA terms, negotiation strategies and procurement best practices in SpendEdge’s upcoming report on the global incident and emergency management software market.

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How to Choose the Right Network Service Provider for Your Business?

Internet and access to mobile networks have been an integral part of our lives. Yet, the only source we know to express our gratitude to is our respective internet service providers (ISP). People are dependent on their ISP’s to provide them with uninterrupted access to the internet and the network. Consequently, the ISP’s are also reliant on network service providers to offer them with bandwidth and network access. When the customers dial into an ISP’s network, it is connected to the internet provider’s network service provider. A network service provider provides all the infrastructure to keep up with the internet traffic demand. As a result, it is essential that ISP’s partner with the right network service provider to provide uninterrupted internet and network connection to their customer.

Supplier Selection Criteria for Network Service Provider (NSP)

Network Reach

In the age of globalization, it is essential to choose a network service provider that can consistently and reliably provide global coverage to cater to customers spread all across the world. NSP’s adopt various strategies to ensure global coverage. Some are global companies that already have a presence in multiple countries, while others partner with local providers to handle all their traffic. The problem with handing-off the traffic to local providers is that of availability and performance guarantee regarding latency issues. While choosing an NSP for your enterprise, it is essential to evaluate the partnership model of the NSP with local providers so that they can ensure a comprehensive network with consistent performance.

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Ease of Business Dealings

Every businesses and enterprise will have different needs based on the industry they belong to, operating geographies, workloads, and business strategies. There is some network service provider who requires the clients to follow strict procurement and onboarding process offering little flexibility. Such rigidness may deem companies unable to cater to businesses or client’s specific needs. To ensure flexibility irequest proposaln service, companies should look out for NSP’s that are able and willing to customize processes, services, or tech support to meet the client’s requirement.

NSP with Connection to the Top Cloud Services Provider

The widespread adoption of cloud service model within the telecommunications industry is forcing the service providers to adjust their selection process of NSP’s. Partnering with the cloud service provider with global reach benefits the companies to have an active presence across the world. Additionally, it also allows them to easily connect to any network service provider just by adding another connection to the network.


For more information on supplier selection criteria for network service provider, managed network services, network providers, network service provider companies, and network management system

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Top Challenges Faced by the Cotton Suppliers within the Cotton Industry

Cotton production dates a long way back to the ancient civilization of Indus Valley of India and Pakistan, with some estimates believing cotton farming to be about 7,000-year-old. Cotton, as the modern world knows it, owes its existence to the industrial revolution in England and invention of cotton grin in the US. Although cotton is widely used in the textile industry for clothing materials, they have applications in other areas as well. For instance, cottonseed oil can be used for cooking and in products like cosmetics, soaps, pharmaceuticals, plastics, and rubber. The demand for cotton for various industries from APAC, MEA, and the South American region is driving the growth of the cotton industry (SpendEdge Report – Global Cotton Market – Procurement Market Intelligence Report). However, numerous factors are hindering the growth of this industry.Request Free Sample

Challenges Hindering Growth in the Cotton Industry

Growing Popularity of Synthetic Fibers

The demand for cotton fiber is slowing down due to rise in popularity of polyester in the textile and apparel industry. Increase in cotton prices and increasing lack of supply has led to the expansion of production capacities of purified terephthalic acid, which is the primary raw material for polyester. Companies in the textile and apparel industry are switching to polyester because of low-cost and durability.

Increase in Production Cost for Cotton

In comparison to most of the agricultural commodities, cotton has the highest per-acre energy costs. For instance, it can require more than 5,000 gallons of water just to manufacture a t-shirt and a pair of jeans. Also, cotton has a high dependence on oil prices for its energy costs in manufacturing and logistics of textiles and fabrics. In addition to energy costs, the cotton industry is also facing a shortage of labor, which is why suppliers are facing challenges to meet the supply quantity and delivery schedules.

Price Volatility in Cotton Industry

Cotton farming usually starts out in spring and require a favorable climatic condition. Natural disasters and change in weather could affect the demand-supply dynamics in the cotton market. For instance, Hurricane Harvey affected the cotton supply in the US leading to the shortage of materials and forcing the cotton suppliers to import cotton from other APAC countries, including China and India. Such fluctuations in the cotton prices could negatively affect the demand for cotton, and suppliers can opt for more stable alternate materials.

High Competition for Acreage Among Agricultural Crops

Crops such as rice, wheat, soybeans, and corn deliver consistently higher returns to farmers compared to cotton crops. Increasing demand for such staple foods will encourage the farmer to plant food crops instead of cotton crops. The report on the global cotton market – procurement market intelligence report from SpendEdge estimates that growth in demand for these crops can lead to a potential decline in acreage for cotton and could affect the supply globally.

Read more about the challenges in the cotton industry along with market trends, cotton prices, cotton supply chain, and key suppliers of cotton in SpendEdge’s upcoming report on the global cotton market.

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