Originally Published on: SpendEdge |Success in Automotive Procurement is not as Elusive as it Seems

#AutomotiveProcurementSuccess #CostReductionStrategies

The automotive industry, while experiencing a surge in ad spending, is grappling with a downward trajectory in ad spend over the last seven years. Despite being the largest advertiser, automotive procurement teams are facing challenges in optimizing costs due to shrinking margins and rising input costs. This article delves into the strategies and challenges of automotive procurement, emphasizing the importance of reducing business costs and sustaining momentum with cost savings.

Unraveling Automotive Ad Spending Trends: Post-pandemic, there has been increased ad spending in the automotive sector, especially by makers of recreational vehicles (RVs) and luxury cars. However, a closer look at the data reveals a consistent decline in automotive ad spend for more than seven years. Despite creative revamps aligning with "memorable ride" and "holiday road trip" trends, automotive procurement faces larger challenges impacting their intended actions.

Navigating Short-Term Challenges: Global auto sales have been on the rise since 2020, yet they are unlikely to reach 2019 levels in 2023. In the face of sustained inflation and pressure on margins, automotive procurement organizations must focus on cutting avoidable costs, including ad, maintenance, and training expenses. This short-term strategy is crucial for weathering challenges posed by high interest rates, squeezed supply lines, and inflation, which continue to impact the industry.

Elevating Cost Consciousness as a Core Value: The long-term profitability and sustainability of the auto industry depend significantly on cost reduction. While cost reduction is a top priority for C-suite executives, successful automotive procurement organizations embed cost consciousness as a shared value within their workforce. Encouraging employee participation in cost-related decisions and involving diverse perspectives in cost budgeting foster a culture of cost awareness. Rewarding cost-saving actions further sensitizes automotive procurement teams to their organization's cost footprint.

How SpendEdge Can Help: SpendEdge offers solutions to help automotive procurement organizations navigate challenges effectively.

1. Supply Base Visibility: Achieve fog-free views of your supply base with SpendEdge's curated supplier databases. Efficiently track supply chain data, activities, and performance to make informed decisions.

2. Risk Scenario Response: Respond to risk scenarios at lightning speed with cost breakdown models that shed light on every cost element in a product's price. Use these models as bargaining tools in negotiations with suppliers.

3. Insider Info on Supplier Landscape: Gain "inside info" on the supplier landscape with SpendEdge's supply market intelligence. Fill out your supply network with expert vendors whose performance aligns with critical KPIs.

Success Story: Navigating Supply and Demand Dynamics: Explore SpendEdge's success story of assisting a US-based auto parts manufacturer in navigating supply and demand forecasting challenges. The client's procurement teams leveraged SpendEdge's expertise to make informed decisions on future demands, ensuring on-time product delivery and minimizing stockouts.

In the ever-evolving automotive procurement landscape, decoding success requires a strategic focus on cost reduction, short-term challenges, and cultivating a culture of cost consciousness.