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strategic sourcing

A Leading Oil and Gas Company Reduces the Net Adjusted Cost of Preferred Suppliers by 12% with the Aid of Supplier Performance Management

The Business Challenge

A leading oil and gas company, who had received substantial concessions to explore and produce natural gas in several gas fields in the United States, was facing challenges in evaluating the performance for pipe, fitting, and flange suppliers for the company. With over 31% spending on pipe, fitting, and flange materials in the financial year 2017-18, they accounted for substantial spending on materials. Therefore, it became crucial for them to implement a robust supplier performance management system that would help them improve the supplier selection process and supply chain management process for the company.

Evaluation of suppliers’ performance is critical for companies to improve supply management. Request a free proposal and access our complete portfolio of supplier performance management solutions.

Solutions Offered

SpendEdge aligned with the client and developed a conceptual supplier performance management framework for pipe, fitting, and flange suppliers. The also proposed a framework which evaluated the supplier performance on the basis of quality, delivery, service and flexibility and identified ways to improve them. They also conducted in-depth interviews with procurement professionals to confirm the appropriateness of the supplier performance management process.

In a span of two months, the supplier performance management process enabled the client to measure factors such as on-time delivery, quality of sales, and delivery accuracy and summarize the overall performance of their suppliers. The insights gained through supplier performance metrics helped them in making informed and knowledge-based decisions about various supply management issues. This involved minimizing operational costs, identifying the most profitable distribution channels, and optimizing the utilization of assets. Additionally, better supplier performance management helped address key areas where the company needed to make improvements related to cost, on-time delivery, quality of goods and services, and inventory.

Interested in making knowledge based decisions about different supply management issues?

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Key Findings

Ranked suppliers

SpendEdge’s approach helped the client to determine supplier performance score on the basis of supplier performance metrics pre-decided by them. The score deduced was based on four main criteria – quality, delivery, service, and flexibility and provided insights to rank suppliers apart from improving supplier relationship management capabilities.

Determined cost ratio

The supplier performance management solution helped them to evaluate the total cost of each purchase, including selling price with the buyer’s internal operating costs pertaining to quality, delivery and services. This allowed the client to decrease the net adjusted cost of preferred suppliers by 12%.

What are the Benefits of Supplier Performance Management?

As a majority of companies feel that two out of the top three major procurement risk factors are associated with suppliers – specifically “dependency on supplier” and “supplier quality problems” – implementing a robust supplier performance management program becomes a must. Some other benefits of supplier performance management that companies look to achieve are:

Improves brand value: Supplier performance management help companies to track supplier performance against set KPIs and enable them to take corrective actions that are imperative for maintaining brand value.

Avoid costs: A variety of cost factors can be tracked using supplier performance management, which can affect both the hard and soft dollar costs for the company. The information provided by the supplier performance management system helps in cost savings by centralizing supplier data into a single source of information for vendors.

Segment and rank vendors: Apart from gaining visibility into specific groups of suppliers and their overall ability to meet organizations expectations and requirements, supplier performance management can help make data-based decisions, especially when it comes to determining the ranking of vendors.

Interested in leveraging the true benefits of supplier performance management? Get in touch with our experts today!

IR18

Supplier Profiling: A Case Study on How Performance Assessment Helped a Car Manufacturer to Reduce Sourcing Costs By 19%

The Business Problem 

The client, a leading car manufacturing company in the US, was struggling amid a tumultuous economy. Despite the US being the largest automobile market, their profit margins were shrinking rapidly, and their stock price had taken a tumble. This compelled the client to take a step back and conduct a comprehensive supplier performance assessment as a major chunk of their total production costs were coming from suppliers due to the implementation of a poor sourcing process. They also realized that conducting a comprehensive performance assessment of suppliers was crucial for the company to decrease costs, improve quality, and integrate new technologies.

Is poor planning increasing production costs for your products? Well, not anymore! Request a free proposal below and know how our performance assessment solutions can improve your supplier profiling process.

Solutions Offered

To cater to the car manufacturer’s predicaments and help them reduce operational costs, the experts at SpendEdge tailored a comprehensive two-step research methodology. This extensive research methodology included primary and secondary research coupled with interviews and discussions with industry stakeholders to identify the optimal process to profile suppliers.

In a span of 12-weeks, the performance assessment solution started showing promising results. Their supplier profiling process improved drastically, and the car manufacturer was able to achieve significant cost savings since they were now able to meet all their performance goals. The company was also successful in removing wasteful costs and activities such as extra freight charges, overtime, safety stocks, obsolete inventory, and buying from multiple sources caused by supplier glitches. Moreover, with the aid of SpendEdge’s performance assessment solution, the client was able to better understand supplier performance and industry best practices, which had a subsequent impact on the costs and supplier engagement process.

Interested in conducting a comprehensive performance assessment of suppliers? Request a free demo and know how our experts can help you in understanding supplier performance industry best practices.

Key Findings

The performance assessment solution helped the client to enhance their supplier relationship and design a program to recognize the high performing suppliers. This reduced their sourcing costs by 19% and helped them mitigate financial risks. The supplier performance assessment also helped address factors such as quality, delivery, and cost management apart from underlying qualitative factors.

Why is Supplier Performance Assessment Critical?

With the increasing number of offshore suppliers, supplier performance assessment becomes critical for companies looking to overcome a variety of supply chain challenges. Companies must conduct performance assessment to gain better visibility into their suppliers’ performance, remove hidden cost drivers, and reduce risks by lowering order cycle times and inventory. Also, the supplier performance assessment process helps companies to achieve at least 20% improvement in supplier performance metrics such as on-time delivery, quality, and cost.


Supplier evaluation is crucial for improving the operational performance of companies. Contact our offices below and know how we can help you increase operational efficiency.







IR33

Six Effective Ways to Build Better Supplier Relationship Management

What is supplier management process? 

Most organization rely on third-party vendors or suppliers for the purchase of goods and services. Therefore, how an organization engages, manages, and communicates with their suppliers and builds supplier relationships is critical to their overall success. Supplier relationship management refers to the process systematic assessment of the suppliers’ assets and capabilities in view of the organizations overall business strategy. This determines activities to engage in with different suppliers, and planning and executing of all interactions with suppliers to maximize the value realized through those interactions. Supplier relationship management seeks to develop a two-way, mutually beneficial relationships with the strategic supply partners of a company. Supplier relationship management helps build better supplier relationships and thereby achieve greater levels of innovation and competitive advantage than could be achieved by operating independently or through a traditional, transactional purchasing arrangement.

Supplier management strategy and solutions for business

The strategic approach to supplier relationship management has always been critical for businesses that rely on third-party suppliers. For businesses that strive to succeed in the market, having trusted relationships with dedicated suppliers should be one of the primary goals. In this blog post, we are going to take a closer look at some of the key supplier relationship management strategy that will help you improve relationships with suppliers and streamline your supplier relationship management framework:

Suppliers are not just vendors

For a smooth supplier relationship management, businesses must consider their suppliers as their partners. This partnership should be based not only on financial transactions but also on mutual trust and loyalty between both parties. Suppliers should be made to feel like they are a part of the business. They must be informed about your processes, such as product launch and promotions. It is also essential to listen to their concerns or grievances. 

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cyber security

Growth of the Frozen Food Industry Driving the Demand for Myristic Acid

SpendEdge Procurement Market Intelligence I- Myristic AcidLondon, Apr 11, 2018: There is an increase in the overall global spending on processed foods, personal care, and cosmetic products due to economic growth. As these are the major end-users of myristic acid, and it has led to the growth of the global myristic acid market. Additionally, the increase in demand for natural fatty acids in food products from end-consumers ensures that they focus on production of food, which contains the necessary amount of natural fatty acid, such as myristic acid.

SpendEdge’s latest procurement research report on the global myristic acid 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 chemicals, 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.

“Myristic acid acts as a preservative within the frozen food industry due to its food quality retention properties. The frozen food industry is expected to grow at a CAGR of 3.6% by 2019, and thereby increase the demand for myristic acid” – A. Kowshik, chemicals expert at SpendEdge.

The raw materials market for myristic acid experiences seasonal volatility due to natural calamities such as hurricanes, tsunamis, floods, or drought. Also, the production of nutmeg, coconut oil, palm oil, and palm kernel oil, which are major raw materials of myristic acid require a tropical climate. Therefore, such seasonal weather changes affect tree plantation and interrupt the supply of myristic acid in adequate amounts causing a major procurement problem.

Need more insights on this report?

Request Free SampleThis procurement report on the glass myristic acid 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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green supply chain

A Supply Market Overview of the Mercury Sulfate Market

Mercury sulfate is a metallic compound that is white, pale yellow, or beige in color, and is in powdered form. It is used is electrochemical cells and acts a good electrode. It exists in two forms mercury (I) sulfate and mercury (II) sulfate.

Request Free SampleUses and applications of mercury sulfate

Mercury sulfate is a highly toxic chemical and should be handled with care. Thereby, its use is more popular in industrial applications. Currently, it is highly used in the manufacturing of the solar cells to generate energy from renewable energy sources. Traditionally though, it has been used as a reagent and catalyst for the production of aldehydes. Currently, the use of mercury sulfate (I) as an electrode in lead-acid batteries to measure half-cell potentials is driving the growth of global mercury sulfate market.

The biggest market for mercury sulfate

North America is the most significant market for the consumption of mercury sulfate with the demand growing at a rapid rate with a CAGR of 2.5%. Such growth can be attributed to factors such as robust growth in end-user applications such as the production of solar cells and use of solar cells in medical devices. North America is closely followed by the APAC region where the chemical is used in consumer electronics industry to power the device with mercury-based battery.

Mercury Sulfate Production HubsLargest suppliers of mercury sulfate

The US, Canada, and Asian countries such as India and China are considered the largest producers of mercury sulfate. The North American market is dominated by producers such as Merck and Alfa Aesae. India and China have a cost advantage as they enjoy low-cost labor and availability of raw materials for manufacturing.

Market developments and trends

The current market is experiencing a high level of M&A activities. For instance, Merck KGaA acquired Sigma Aldrich, one of the major suppliers of mercury sulfate, which expanded the product portfolio and geographic reach of Merck. Such suppliers are also investing heavily in R&D activities to provide industry-specific grades based on end-use applications. Such activities will help buyers to adhere to regulations such as ECHA (EU), FDA (US), and EPA (US) based on end-user requirements.

Technological innovations

As seen in all manufacturing industries, automation has taken over in this market as well. Suppliers are adopting automation in their operational process to increase the capacity utilization rate and thereby, enhance the efficiency of the production process. Additionally, they are also implementing centralized IT software that helps suppliers to manage inventory levels, making it easier to supply mercury sulfate based on the stock-levels at different operational facilities.

Top Five Suppliers

Merck KGaA

Merck KGaA is an American multinational company and is among the largest pharmaceutical companies in the world. It thrives on manufacturing medicines, vaccines, biological therapies, and animal health products.

Revenue: $16.9 billion

Alfa Aesar

Alfa Aesar is a subsidiary of Thermo Fisher Scientific that manufactures products such as chemicals, metals, and life science products.

Revenue: $18.2 billion

Yogi Dye Chem Industries

Yogi Dye Chem Industries is an Indian manufacturer, exporter, and importer of pharmaceutical raw materials, bulk drugs, metallic salts, veterinary feed additives, and chemical fines.

Revenue: $50-100 million

Cfm Oskar Tropitzsch

Cfm Oskar Tropitzsch is a manufacturer of pharmaceutical and chemical intermediaries, which includes reagents, API’s excipients, and various metal compounds.

Revenue: $50-100 million

Shanghai Zhihua ChemTech

Shanghai Zhihua ChemTech manufactures and provides various chemical and pharmaceutical products and caters to the life science and pharmaceutical industries.

Revenue: $10-50 million

 

Read more about the supply market overview of the mercury sulfate market along with procurement insights, procurement challenges, pricing models, and technological advancements in SpendEdge’s upcoming report on the global mercury sulfate market.

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IR25

Demand from Nuclear and Agriculture Sector driving the demand in the Defoamers market

Procurement Report DefoamersLondon, Mar 16, 2018: Increasing focus on wastewater treatment in most of the geographic regions, and wider applications in end-user industries such as nuclear, agriculture, and F&B is driving the growth in the global defoamers market. The advent of polymer-based defoamers, especially silicone-based defoamers, is providing value growth for the market as they are priced higher compared with water-based or powder defoamers.

SpendEdge’s latest procurement research report on the global defoamers 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 chemicals portfolio, 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.

“The market is observing the high adoption of defoamers based on polymers such as silicone, polyethylene glycol, and polypropylene glycol. These defoamers are considered heavy-duty and find applications in demanding foam-control situations in crude oil refining. Polymer-based defoamers are usually available as oil-based or water-based solutions and emulsions.” – Bhuvaneshwari Udayakumar, chemicals procurement research specialist at SpendEdge.

The buyers need to understand the optimum use of defoamer required for their processes to efficiently manage the spend on the category. Overuse of defoamers leads to material wastage, while underutilizing leads to lack of volume reduction of the foam. As a result, buyers face procurement challenge in making optimum use of defoamers.

Need more insights on this report?

Request Free Sample 

This procurement report on the defoamers 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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cyber security

How to Measure Your Supplier Performance in 7 Simple Steps

supplier performance

Every company invests a considerable amount of time and effort in the supplier selection process, but in the long run, how do they evaluate if the supplier’s performance is meeting the desired standards? And how important is the measurement of supplier performance for a business? Almost all companies are already deploying some form of supplier performance measurement, be it in the form of key performance indicators (KPIs), or more sophisticated data gathering, and on-site assessment programs. Also, when businesses evaluate the performance of their supplier, the shortcomings in the adherence to standards can be easily detected; thus, promoting improvement. Here are seven steps to critically evaluate your suppliers, which can result in meanSE_Demo2ingful outcomes and better return on investment:

Align performance goals

Smart businesses must first have a clear-cut supplier strategy that relates to the overall organizational objectives and goals. In the long run, this will also help them to enhance their supply chain management. To achieve this, organizations can pursue continuous improvement programs and methodologies such as Six Sigma, lean enterprise, lean sigma, continuous improvement, operational excellence, and total quality management. Typically, companies trying to get to the next level of excellence need to have key suppliers aligned with their own organizational direction. Lack of synchronization in supplier activities and organizational goals can adversely impact cost, quality, and delivery.

Choose evaluation approach

Companies must evaluate some of these critical aspects of supplier performance, including financial health, operational execution, metrics business processes, and practices enabling behaviors or cultural factors risk factors. These factors can help review and understand the supplier’s readiness to comply with the organizational requirements and also efficiently meet the supply chain management requisites and guidelines.

Develop information collection method

The methods of information collection regarding the supplier performance include paper questionnaires, web-based questionnaires, extracts from current systems, site visits, and third-party standard certification. However, all these methods have their own challenges and complications. Companies must choose the method that best suits their purpose and gives them the optimal results.

Design a robust assessment system

No matter which components of a supplier performance assessment system an organization develops, a significant challenge lies in creating a system that is based on metrics both relevant to the business and based on generally accepted best practices. Designing and developing a robust supplier performance assessment system requires in-depth business knowledge, familiarity with high-performance systems, and expertise of measurement methodologies. Furthermore, it also requires expertise in adequately constructing the questions to elicit accurate responses and correctly measure performance.

Roll out the system

One of the most significant difficulties in assessment systems is the deployment. Primarily due to the vast number of challenges associated with each of the supplier assessment systems. Survey instrument development expertise, subject matter expertise, and knowledge of IT are needed to avoid the pitfalls in deploying all these approaches.

Provide actionable feedback     

Customer companies need to have a real dialogue and discussion with their suppliers on performance and work on the critical issues of the performance. This requires a two-way flow of information. If the results of supplier performance measurement and supplier assessment are not actionable or expectations of actions are not communicated, those actions will not be put into practice.

Showcase results

Measuring supplier performance is all about understanding, communicating, and then implementing the necessary corrective action for improving supplier performance. What companies need to do is to work with suppliers to develop action plans as a result of assessments. They should then track performance to these plans to close the loop and realize the full benefits of the supplier performance measurement process.


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The Giants of the Sheet Metal Production Industry

Sheet metal is one of the fundamental forms of steel used in metalworking, which can be cut or bent into a variety of different shapes and sizes. Countless everyday objects and materials are built using sheet metal. Sheet metal forming operations produce a wide range of consumer and industrial products including electronics, kitchen utensils, robotics, aircraft fuselages, and metal furniture. It comes as no surprise that the valuation of the sheet metal market stood at $289.45 billion in 2017. The automotive industry is responsible for the increasing market size of sheet metal, with the estimates stating that the demand for aluminum sheet metal will cross 2750-kilo tons by 2020. (Procurement Market Intelligence Report – SpendEdge) Additionally, the booming manufacturing sector in countries such as China, India, Taiwan, and the Philippines has driven the demand for sheet metal. So, who are the top players in the sheet metal market who will benefit from such a phenomenal growth?

Request Free SampleBlueScope

BlueScope is a global leader in painted and coated steel products and is the world’s third-largest producer of coated steel products. The company primarily caters to markets in Australia, New Zealand, and the western coast of the continental US. Apart from sheet metal, the company also offers hot rolled coil, steel strips, metallic coated steel, and safety data sheets. The company sells its products under the brand name Colorbond, Zincalume, Galvabond, Galvaspan, Zincanneal, Truecore, Tru-Spec, and Uniblanks. In November 2016, BlueScope was awarded by the New South Wales government for its sustainability efforts for the tenth year in a row.

NCI

NCI has been formed because of the consolidation of 19 companies and is one of the world’s largest suppliers of metal components and engineering building systems. The company offers a broad range of products that can be used in new construction activities, repair, and retrofitting. The company sells its metal component brands under the name ABC, DBCI, MBCI, Metal Depots, METL Span, and Centria. Almost half of its revenue is generated from such metal component brands.

Nucor

Nucor is globally renowned for its sustainability practices and is presently North America’s largest recycler with a production capacity of more than 27 million tons. The company is also recognized for its early adoption of new technologies and was among the first companies in the world to use electric ace furnace in its operations instead of the traditional blast furnace. The company is also North America’s largest recycler of any material recycling about 16.9 million tons of scrap material in 2015. Carbon steel, fasteners, metal building systems, sheet metal, and alloys are some of the products offered by the company.

United States Steel

United States Steel is among the world’s top 15 steel producers in terms of production capacity. It was formed as the result of a merger between three global steel producers. The company has a production capacity of more than 22 million tons of steel and is among the largest steel producers in North America. Apart from sheet metal, the company also provides solutions to US federal government and defense industrial base. The company reported revenues of $10.26 billion from five countries including the US.

Alcoa

Alcoa is among the top ten producers of aluminum worldwide. In 2016, it was ranked as the world’s sixth largest aluminum producer in terms of production capacity. In 2016, the company split into two different entities, namely Alcoa and Arconic. The company’s product portfolio includes products and services including aluminum smelting, aluminum casting, aluminum rolling, bauxite, and alumina. The company has operations across the world in countries ranging from the US, Australia, Netherlands, Canada, Norway, Spain to Brasil and Guinea.

Read more about the key suppliers in the sheet metal market along with supply market insights, procurement insights, category management, and pricing models in SpendEdge’s upcoming report on the global sheet metal market.

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