Tag: Supply Management

supply management

How Supply Management Solution Helped an Industrial Materials Manufacturer to Reduce Inventory Costs – A SpendEdge Case Study

The Business Challenge

A process manufacturer of industrial materials based in North America had a business objective to maximize shareholder value of the company. Their prime focus was to improve profitability and asset utilization, with a productive P&L and balance sheet. The company’s products were on the edge of being commodities without offering much product differentiation from competitors. The primary means of gaining and holding market share was quality and this required them to enhance supply management.

Additionally, the company was vertically integrated and had limited sources of raw material in most of the major product lines.  This meant that the company often had to enter into long-term contracts with vendors to ensure supply and operate facilities to capture byproducts from other industries’ processes to obtain material. The quest for increased profitability compelled the company to engage with SpendEdge and determine cost reduction opportunities in every part of the company while improving the supply management process.

Improving profitability and asset utilization can be a herculean task for companies. Request a free proposal and access our complete portfolio of supply management solutions.

Solutions Offered

The experts at SpendEdge worked closely with the client to analyze strategies and identify alternate approaches to provide a realistic assessment of risks and ensure that the client receives the best value-for-money. They consolidated suppliers within specific supply markets, reduced purchasing and supplier management costs and increased the efficiency of their supply management process.

Prior to this collaboration with SpendEdge, the negotiating opportunities didn’t exist for the client as they competed for material in the constrained marketplace, so vendor price negotiations and seeking of large-scale, free, value-added services were not considerable options. Moreover, all of the inventory was sold, and it was taking time to place it, which was resulting in poor margins for the client. SpendEdge’s supply management services helped the client to work with stakeholders without being tied to any one supplier. This helped them to identify suppliers who can offer the shortest lead time and the most competitive pricing among the available sources. The supply management strategy offered improved the production process and helped the client to

  • implement effective demand forecasting functions in the divisions.
  • establish documented procedures for forecasting
  • inventory planning and management.
  • production planning.

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Key Findings

In a span of six months, the supply management strategy devised by SpendEdge resulted in the reduction of inventory carrying costs by approximately $0.7 million per year on an investment of $200,000. The business process implemented further redesigned warehousing process and offered additional corporation-wide transportation savings.

Deployment of supply management strategy helped the client to gain detailed insights and change the supply management policy so that customers can receive continuous supply. This redesigned their customer service process and improved brand value by ensuring timely delivery of products. In addition, the supply management solutions lowered supply-chain costs and boosted their overall profitability.

How Does Supply Management Work?

Supply management is a business process that involves the coordination of pre-production logistics and inventory management. The key aspects of supply management are oversight and management. It involves oversight and management of suppliers and analyzes their contribution to the company’s operations. An effective supply management process includes:

  • Identification and procurement of goods and services that are crucial to a company’s ongoing operations.
  • Establishing supplier management process to improve relationships with suppliers.
  • Implement procedures that facilitate the procurement process.

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Supplier management solutions

Why Investing in Supplier Relationship Management is a Bankable Idea?

Businesses often tend to ignore one thing: supplier relationship management. They focus on fostering customer loyalty and ignore the fact that establishing relationships with suppliers and managing them is equally important. In fact, the rise in the number of suppliers and increasing complexity of supply chains is making supplier relationship management even more crucial.

However, companies have now realized that the supplier relationship management is imperative to develop bilateral, trust-based relationships with key strategic suppliers to reduce supply risk, decrease long-term costs, and develop more efficient procure-to-pay and supply management processes. This is compelling companies to leverage the benefits of the supplier management program and systematically manage interactions with key strategic suppliers while maximizing the value of those interactions for their procurement organizations. In this blog, we have compiled a list of benefits that companies should look to achieve through supplier relationship management.

Effective supplier relationship management increases profitability and drives efficiencies for businesses. Want to know how? Request a free demo to improve your supplier relationship management now!

Supplier relationship management benefits

Optimizes procurement process

Many times, the turnaround time between registration of requirement and the delivery of the goods and services is invariably long. The major reason behind this delay is the time spent by the procurement department in handling the request for quotation (RFQ) processing. The preparation and issue of RFQ’s followed by quotation processing, shortlisting and negotiations can be a sluggish and drawn-out process. Continual ‘one off’ RFQ processing represents ‘death by a thousand cuts’ for the procurement department leads to significant delays in delivering the requirements of businesses. Time spent in supplier relationship management is represented in the company’s e-catalogs that reduces the number of RFQ situations and speeds delivery schedules dramatically.

Another issue pertaining to the procurement cycle is the time taken for requisition approval. Managers involved in the requisition release hardly have any time to look into the operational IT systems. Requisitions wait unnecessarily in e-commerce/ ERP systems for the budget holder to sign-on and release them. In such cases, the visibility of the full supply chain becomes a critical piece of equipment. Implementing supplier relationship management strategies addresses the  ‘visibility’ issues efficiently in such situations.

Reduces the number of strategic suppliers

Establishing effective governance is vital to unlocking supplier relationship management value.  It requires alignment within the organization and setting up of internal governance processes with ownership of supplier relationships. Since the ownership of the relationship can lie outside the procurement organization, it is essential to involve the right suppliers from the business in the process. Companies can track operational measures mutually agreed with tier 1 suppliers through supplier relationship management governance and can concentrate on a limited number of strategic suppliers.

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Improves supplier performance

Although establishing strong contract relationships and ensuring buyer and supplier compliance to those agreements is one part of delivering value, yet it can distract businesses from the ultimate value created from a supplier relationship management.  Value from a supplier relationship comes through innovative and collaborative activities that focus on solving customer problems. This primarily involves sharing of plans between the two entities and jointly defining initiatives that can create long-term value for both organizations through supplier relationship management, such as:

  • Innovative business plans, aligning supplier’s creative efforts to business needs.
  • New market penetration, leveraging strengths and knowledge of both organizations.

Consolidates the supply chain

As supplier’s and buyer’s business work in collaboration,  understanding the inner workings of each other becomes easy through a supplier relationship management process. It helps both parties to adapt their own working practices and operations to better accommodate the other and improve their operational efficiency. The consolidated supply chain further allows the buyers to reduce the number of suppliers they purchase from and streamlines the purchasing process thus making the scope for financial improvements.

Maximizes the usage of inventory

As a result of recent upstream sector trends,  inventory management has started facing several challenges. The transfer of stocks between companies due to mergers and acquisitions is leading to poor visibility and compelling companies to externally procure materials when stocks of material are actually available. Supplier relationship management addresses these issues by automatically determining appropriate sourcing strategies using catalogs and integrating them with a back-end system that is capable of handling the separation of stocks.

SpendEdge’s advantage

SpendEdge’s strategies enable businesses to consolidate suppliers within specific supply markets and reduce purchasing and supplier management costs while increasing the efficiency of their procurement process. It analyzes various parameters including equity interests, sales volumes, technology base, manufacturing, and distribution capabilities, and helps companies make better purchasing decisions by improving the supplier relationship management.

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supply management

Supply Management: Improving the Business Cost Structure for a Sporting Goods Manufacturer

The Business Challenge

The client, a leading supplier of sporting goods with outlets spread across different regions in North America, was facing predicaments in ensuring the supply of materials and services. Their traditional process of obtaining and managing raw materials was inefficient, especially when it came to reducing their splurge and streamlining inbound logistics from different countries. This was resulting in substantial losses for the company and was also reducing their efficiency when it comes to improving the bottom line. The client, therefore, decided to collaborate with SpendEdge and leverage our expertise in offering actionable supply management services.

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Solutions Offered

By analyzing the current market scenario, risks influencing proft margins, and new market disruptions, the experts at SpendEdge focused on developing better supply management capabilities for the client. They conducted a comprehensive market research to obtain accurate real-time insights and determine appropriate supply markets for procuring products at the right prices.

The strategic approach adopted by our experts helped the client to take critical decisions related to suppliers. These decisions involved the identification and classification of capable suppliers, negotiation of the specific purchasing item, price, payments and volume, contracts, supplier development, and analysis of suppliers’ financial condition. Such an approach allowed the client to make better purchasing decisions while identifying key factors driving prices. Moreover, this highly focused approach helped the client to reduce two-third of its revenue, which was spent on buying goods and services, and enabled them to select appropriate suppliers.

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Key Findings

Implementing SpendEdge’s supply management strategy helped the client to obtain detail information on supplier landscapes from specialized databases and prime cost benefits associated with them. This helped them to select the best cost sourcing locations and understanding prime cost advantages. Furthermore, the strategy helped the client to reduce excess spend, make efficient use of resources, and improve the business cost structure of the company.

What is the Importance of Purchasing and Supply Management?

Since organizations are spending more than 50% of their turnover on supplies, purchasing and supply management is becoming crucial for companies to stay competitive. They need to select and manage their suppliers efficiently to ensure the timely supply of materials and services to meet companies’ strategic plans and add value to their businesses. With a potent supply management strategy in place, companies can identify the needs of an organization and get the most profitable agreements in place. Additionally, a proper supply management system helps companies to avail the goods at the best prices while maintaining a cordial relationship with suppliers.

Ensuring the smooth supply of goods and services can be a taxing job for companies. Contact our offices below  and know how our supply management solutions can help your organization to address such issues.







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How Following Procurement Best Practices Helped an Automotive Company to Reduce Sourcing Costs by 11% – A SpendEdge’s Success Story

The Business Challenge

The client, a well-established automobile manufacturing company in the US, was facing a number of challenges due to drastic shifts in the global supply chain. Since they were looking to expand their business to new and emerging markets, they wanted more information on the procurement best practices. Developing a suitable business model was a key challenge for the automotive company since these markets were posing challenges related to global trade and finished vehicles logistics fulfillment. This was increasing the need to reduce production costs and excess spend. Their primary aim was to outperform competitors, both in home and emerging markets, by reducing operational costs, increasing efficiency, and following the best practices to meet the regulations of the emerging markets.

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Solutions Offered

To address the needs of the client, the experts at SpendEdge identified the procurement best practices for the target region and tailored a plan that would allow them to procure raw materials at the lowest possible price. The analysts at SpendEdge followed a scrupulous research methodology that comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.

In a span of eight weeks, the automotive manufacturing company was able to successfully lower their sourcing and procurement costs by 11%. Our expertise in analyzing the procurement trends and regulations of international supplier markets further helped the automotive company to improve their relationship with key suppliers and minimize procurement risks. By following the suggested procurement best practices, they were finally able to maintain a healthy relationship with suppliers. The engagement also emphasized on the importance of selecting the right supplier, especially when it comes to ensuring the highest quality, flexibility, and cost efficiency of their supplier networks.

Key Findings

By adhering to the suggested procurement best practices, the client was able to enhance their procurement system and synchronize supply management with demand across business processes. They were also able to evolve from a fixed-cost-driven supply network to a variable-cost-driven value network and streamline information flow from the department level to a global scale. This reduced costs for the automotive company by 11.2%.

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What are the Basic Principles of Procurement Best Practices?

Procurement has become a fundamental enabler of business strategy and a preferred method for achieving sustainable cost reduction for many business entities. It is considered to be the most viable option for process simplification with technology enablement. Therefore, businesses should adopt procurement best practices to realize the full potential of their sourcing process.

While following procurement best practices, the team should strike the right balance between short-term savings opportunities and longer-term transformational opportunities. This provides good traction, better substantial benefits, and supply management for companies. Here are a few procurement best practices that companies should follow:

  • Devise a spend map
  • Engage with a wider organization to reduce costs
  • Ensure supply management and contract management
  • Connect commercial and technical capabilities

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Procurement Intelligence Solutions for a Retail Company – A SpendEdge Success Story

Procurement Intelligence Solution Transforms Finance Operations and Enhances Supply Management

About the Client 

The client is an American multinational retail-clothing firm. With over 500+ stores, the company employs around 57,000 people globally.

The Business Challenge 

With changing consumer behavior and technological innovations, retailers across the globe are uncovering new ways to sustain from the disruption. Moreover, retail brands are coping with a long-term uptrend in commodity and other raw materials input prices, and rapidly shifting global supply chain. These mounting global supply chain complexity with retail markets is forcing retail companies to be more agile and react faster than other players in the market. This is where procurement intelligence comes into play. In today’s competitive market scenario, procurement intelligence is the key to establishing long-term strategic sourcing and supply management plans.

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

Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs

About the Client 

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

The Business Challenge 

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

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

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Supplier Profiling: Boosting Supply Management and Identifying Key Competitors for a Fleet Management Firm

Overview of the Fleet Management Industry

Fleet management enables enterprises to track and maintain their vehicles in a quick, cost-effective, and accessible way. It typically involves functions such as vehicle tracking and diagnostics, and financing, driver management.  

The primary growth driver of the global fleet management industry is the increase in demand for transport and logistics. Fleet management firms offer several benefits such as enhancement in vehicle performance, maintenance planning, and scheduling of fleet routing, which enhances the fleet safety and also customer satisfaction. The other major factor driving fleet management industry is request free proposalthe need for organizations to streamline their operations for greater connectivity and reduce the hardware cost needed to perform the necessary fleet management. Furthermore, recent innovations like smart transportation solutions and connected vehicles will drive the market for fleet management solutions.

However, certain factors are restricting the growth of the fleet management firms. Some of the factors include:

  • Cost-reduction initiatives: The pressure to reduce costs typically comes from the top of the business hierarchy and is applicable to every department in the organization. When this responsibility falls on the shoulders of the fleet manager, the individual is faced with numerous variables in budgeting and forecasting.
  • Fuel price volatility: One of the major factors in the effectiveness of any cost-reduction strategy for fleet management firms is the volatility of fuel prices. Fuel prices are difficult to estimate, and as a result, difficult to budget. Therefore, creating a compelling cost-management strategy, then successfully executing it as planned, has become incredibly difficult for fleet management firms.

Many such factors are compelling firms in the fleet management space to leverage the use of supply management and supplier profiling solutions. Supply management and supplier profiling solutions help firms profile the most appropriate suppliers and reduce risks associated with production delays and ensure consistency in their service offerings.

The Business Challenge and Journey

Client background: A leading fleet management firm with business units spread across the globe wanted to better understand the latest industry trends and identify the key suppliers.

Client issue: The client wanted to keep track of the supply management performance and identify the strengths and weaknesses of their suppliers. Additionally, the client wanted to profile the most appropriate suppliers to reduce the time-to-market for their service offerings.

SpendEdge’s supplier profiling experts followed a scrupulous research methodology and carried out discussions with prominent stakeholders in the fleet management industry to help the client boost supply management and identify key competitors. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums.

Client journey: During the course of this supply management and supplier profiling engagement, the fleet management client profiled the most appropriate suppliers to reduce procurement costs and excess inventory costs. The client was able to maintain a customer-focused business to deliver the desired service quality to the customers.

Key questions answered in this supplier profiling engagement

The Results

With the help of SpendEdge’s supply management and supplier profiling solution, the fleet management firm was able to proficiently manage their supplier database and segment suppliers based on their criticality. This helped them minimize maverick spend.

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SpendEdge’s Supplier Profiling Study Helps a Leading Pet Supplies Client to Identify High-Risk Suppliers

Category Overview

The pet supplies industry has purred along over the past few years due to the rising popularity of dogs, cats, fish, and birds as home companions. Moreover, growing popularity of pet ownership has facilitated demand for higher number of pet supplies. Also, fuelled by economic recovery, the pet supplies industry has expanded widely, despite increased competition from mass merchandisers, supermarkets, and online retailers that offer consumers greater convenience, variety, and competitive prices.

However, according to the supply management specialists, drastic changes in the retail environment over the past decade with e-commerce becoming an option poses a significant challenge for pet owners. Also, to balance brick-and-mortar risks with e-commerce risks and ensure consistency across channels, pet supplies manufacturers have started leveraging supplier profiling studies to identify high-risk suppliers. Moreover, the supply management solutions offered by SpendEdge also help pet supplies firms to develop a superior supplier operational and functional capability matrix.

The Procurement Pain Point and Insights Offered

A leading pet supplies manufacturer wanted to identify a list of high-risk suppliers. Additionally, they wanted to gain deeper insights into the supplier’s capability matrix. They also wanted to gain insights on the competitors’ products and service portfolio across various geographical locations. Furthermore, the pet supplies industry client also wanted to identify the profiles of key industry players by covering aspects such as financial structure, business profile, and their revenue.request free proposal

To address the issues and meet the specific requirements of the client, the supply management specialists at SpendEdge carried out a comprehensive approach comprising of primary and secondary research. Also, our supply management specialists created a dashboard by compiling information from various proprietary sources such as company newsletters, journals, and media platforms.

With the help of this supply management study, the pet supplies industry client was also able to identify a list of high-risk suppliers and gain deeper insights into their capability matrix. Additionally, the client gained insights on the competitors’ product and service portfolio across various geographical locations. The engagement also helped the client gain insights on competitors’ financial structure, business profile, and their revenue.

Key questions answered in this supply management study include

pet suppliesBusiness Outcome

The supply management study helped the pet supplies client identify a list of high-risk suppliers and gain deeper insights into their capability matrix. Additionally, the client was offered suggestions on pricing models to enhance engagements and drive ROI.

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Top Three Spend Analysis Best Practices

Organizations must adopt spend analysis best practices as it is key to achieving procurement and sourcing success. Majority of the companies make their decisions based on inaccurate, poor, and incomplete data obtained through unreliable sources. As a result, businesses were unaware of how much they spend on which products, thereby relying on guesswork and intuition. Today, organizations have realized the importance of spend analysis to increase the efficiency of their procuremenSE_Analystt function. Chief procurement officers (CPOs) and other procurement professionals must leverage these spend analysis best practices to ensure an efficient and effective spend management program. By adopting spend analysis best practices prevalent in their respective industry, businesses can gain insights that help organize, plan, and manage procurement and sourcing decisions in the organization’s supply chain. Spend management is gaining momentum in enterprises to drive continuous improvement in supply management, thereby enabling strategic decision making.

#1 Spend Analysis Best Practices –  Audit Spend Management Capabilities

One of the most important spend analysis best practices that organizations must adopt is to conduct an audit of the businesses spend management capabilities and infrastructure. Businesses can begin with understanding and creating a spend data system map, check the completeness, accuracy, and depth of the available data, conduct a company-wide spend analysis, and gain a clear picture of existing data management processes. Organizations must also assess their internal capabilities and skills, enlist the areas that need to be augmented, and finally ensure that data is accessible to everyone involved in the decision making process.

#2 Spend Analysis Best Practices –  Detailed Spend Classification

Organizations must ensure data cleansing and classification with the help of spend analysis software or tools. These spend data management solutions facilitate extraction, classification, and analysis of spend data, thereby automating and streamlining current processes. Furthermore, businesses must ensure a detailed classification of the spend data, thereby enabling visibility and comparison across supplier and commodity attributes. A detailed spend classification provides the organization with deep visibility of the total spend, thus facilitating strategic sourcing decisions based on accurate and actionable insights.

#3 Spend Analysis Best Practices – Leverage Supply Intelligence

One of the spend analysis best practices for organizations is to leverage business and supply intelligence to obtain a clear picture of the company’s total spend and compliance standards. Enterprises can also enhance and enrich their spend data with the insights gained through supply intelligence, thus leveraging the insights to make trade decisions. The external market and supply intelligence offer necessary actionable insights that help businesses to optimize sourcing decisions and inventory strategies.

To know more about spend analysis best practices and supply intelligence

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View the latest case study from SpendEdge to know how a better and a smarter spend analysis solution can benefit your organization to reduce costs and improve process efficiency. 

 

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