ProcessCo.s’ industry has experienced high consolidation over the last 15-20 years. With only 4-5 large players in the market, ProcessCo.s’ customers now had limited options to choose from. Thus ProcessCo. was concerned with any changes in its customer supplier strategy as it could have a large impact on their financial performance.
6Sourcing criteria identified
18Decision making factors analyzed
ProcessCo. wanted to get deeper insights from its customers wrt their sourcing strategies due to supplier market consolidation. For this project three key buyer profiles were analysed: P&L, production and sourcing.
The key research questions were:
Q1. Do customer companies prefer multi-supplier strategies to hedge risks?
Q2. What are the pros and cons of each strategy from each key decision maker perspective?
Q3. What pricing model do customers prefer for product and service purchase?
ProcessCo.’s key customer segment was facing two main challenges:
Overall market and growth decline
Few supplier options & limited knowledge
To counter supplier power, ProcessCo.’s customers started allocating smaller contracts to new suppliers, to keep competition alive in critical application areas. The customers were also highly risk averse towards any new solutions a small loss in production could significantly impact their annual bottom line results.
The project was executed in three-phases:
Phase I: Supplier sourcing strategy and risk hypotheses developed
SCG's agile workforce interviewed senior management at ProcessCo. to understand their perspective on the key topics that potentially impacted the customer’s sourcing decisions. Then it listed the components of each topic and further developed hypotheses for each.
Phase II: Prioritization criteria identified
During this phase, SCG's agile workforce prioritized the six sourcing topics based on their impact on purchase influence and decision making. To gather these insights, in-depth interviews were conducted with 29 industry experts from three different profiles i.e. P&L, Production and Sourcing. The findings revealed the priorities of each business function and leader based on each profile's key responsibility area, KPIs and reporting structure
Phase III: Analysis of buyer motivation and willingness to pay
Based on the insights gathered, SCG's agile workforce created a communication strategy for ProcessCo. based on each stakeholder’s function priority. Finally, the topics were listed in order of willingness-to-pay.
ProcessCo. utilized SCG’s on-demand workforce to accelerate progress on a critical company topic. Based on the outcome ProcessCo. revised its sales strategy and customized it to target the KPIs of each business function at the customer's organization.
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