Strategic Sourcing Pulse

  The automotive sector is undergoing a seismic shift, marked by mass layoffs, operational restructuring, and the reorientation of global strategies. These changes reflect a broader realignment driven by evolving consumer demands, technological advancements, and regional market challenges. In this blog, we’ll explore the latest developments, why Europe is at the center of this turmoil, and the opportunities these changes present for the U.S. and other regions. 1. Current Market Landscape: Navigating Industry Turbulence Key Trends in the Automotive Industry Slowing EV Adoption Global EV (Electric Vehicle) sales have been underwhelming in key markets like Europe and North America. Ford, Tesla, and other OEMs (Original Equipment Manufacturers) are reporting lower-than-expected sales, forcing cost-cutting measures. Rising Costs of Production Escalating raw material prices for critical EV components like lithium and cobalt are shrinking profit margins. These increased costs are being passed

 The resin cost calculation method is based on understanding the various stages of the manufacturing process, from crude oil to polypropylene (PP) or other resin products. This approach helps develop a more realistic price negotiation strategy by analyzing the actual costs at each stage, rather than simply accepting the market index price. 1. Key Components of Resin Cost Calculation The cost of resin is primarily determined by crude oil price, processing costs, and efficiency at each stage. The calculation follows these steps: Crude Oil Price : The production of PP and many other resin products starts with crude oil. The crude oil price is converted to naphtha, which is the key raw material for resin production. Global crude oil benchmarks, like Dubai Crude, are used to determine the price of crude oil, making it the most fundamental variable in cost calculation. Naphtha Conversion Rate : The conversion rate from crude oil to naphtha typically ranges between 7% and 10%. This rate repre

 Northvolt emerged as a beacon of hope for Europe’s EV battery industry, championing sustainability and touting a leadership team that included former Tesla COO Peter Carlsson. The company's narrative painted a picture of technological superiority and independence from Asian battery manufacturers. Yet, recent struggles—production delays, quality issues, and the loss of major contracts—have cast doubt on its capabilities. Northvolt’s journey offers critical lessons for supply chain and procurement professionals, emphasizing the importance of technical validation and supplier reliability. A Promising Start: Northvolt’s Vision for European Battery Independence When Northvolt was founded in 2016, its mission resonated strongly with Europe’s aspirations for self-reliance in EV battery production. The company emphasized three core principles: Sustainability: Leveraging recycled materials and renewable energy to reduce environmental impact. Technological Innovation: Promising high-perfo

 Managing suppliers for each commodity can significantly impact a company's costs, risks, quality, and relationships. In this blog, we'll explore strategic approaches to maintaining different numbers of suppliers in an intuitive and engaging way. This guide aims to help purchasing managers develop long-term strategies, complete with real-world examples for easy understanding. Single Sourcing Strategy: Leveraging the Power of One Supplier A Single Sourcing strategy involves contracting with just one supplier for a specific commodity. This approach is ideal for situations where building a strong, close relationship with a supplier can enhance quality and technical capabilities. It is particularly suitable in the following cases: When high-level technology or patented products are required When a long-term trust relationship with the supplier is important When expecting cost reductions through large-volume purchases For example, Tesla collaborates closely with Panasonic for i

 Over the past 20 years, the automotive industry has experienced dramatic changes and challenges, much like a gripping drama. The once-dominant automakers saw their empires crumble while unexpected new players emerged, completely shifting the industry's balance of power. These changes are not just about business; they're a saga of technological innovation and shifts in the global economy. In this blog, we will explore the fascinating history of these transformations in the automotive industry and discuss how we can prepare for the future. 1. The Collapse of GM and the 2008 Financial Crisis The 2008 global financial crisis shook the automotive industry to its core. At the time, GM was the world's largest automaker but faced a severe downturn and filed for Chapter 11 bankruptcy in 2009. GM's sales, which stood at 9,370,000 vehicles in 2007, plummeted to 6,500,000 units in 2009. GM's heavy reliance on the U.S. market left it vulnerable to the financial crisis, ultimate

 Negotiation is more than just a skill to make deals—it's about understanding human psychology and innate behaviors. By effectively leveraging psychological insights, you can guide the other party's thoughts and actions to reach a desired outcome. Let’s dive into some fundamental principles of human nature that can be used to enhance negotiation skills. The Principle of Reciprocity People have an intrinsic tendency to reciprocate when they receive a favor. This is one of the core aspects of human nature, and it can be effectively utilized in negotiations. By offering small concessions or showing goodwill early in the negotiation, you can create a sense of obligation for the other party to return the favor in some form. For instance, if you initially accept certain conditions that the other side wants, they are more likely to accommodate your requests later in the negotiation. This creates a cooperative environment. Another practical example is to provide the opportunity for you

  The automotive industry is facing unprecedented changes and challenges. European and Japanese automakers are struggling with declining sales, increasing competition from Chinese companies, and stricter global regulations. Meanwhile, the U.S. is seeking to strengthen its domestic industry with new tariff policies and production strategies. In this post, we'll take a balanced look at the key trends in the global automotive market, how different automakers are responding, and what opportunities lie ahead for the U.S. 1. Slowdown for European and Japanese Automakers European and Japanese automakers are experiencing a slowdown in growth and declining sales due to several complex factors, including strict environmental regulations and increasing costs. For instance, the European Union plans to enforce a much stricter CO2 emissions regulation in 2025, reducing emissions to 93.6g/km. Automakers failing to comply face fines of €14 per vehicle, which could significantly impact their profit

  In the world of purchasing, we're always on the hunt for that magic trick that can cut costs without cutting corners. The good news is, there are many strategies that make it possible. The even better news? You can save money and maybe even crack a smile while doing it. Here are some tried-and-true cost-saving strategies for purchasing teams, complete with examples and a little humor to make the savings journey a bit more fun. 1. "The Crystal Ball Strategy" - Market Analysis and Trends Staring into the market trends isn’t about seeing the future—it’s more like making sure you don’t get caught in the rain without an umbrella. By closely monitoring raw material prices and freight cost trends, you can predict when to buy at the best price. Raw Material Market Trend Monitoring : Keep an eye on raw material prices to anticipate cost fluctuations and make strategic buying decisions when prices are favorable. Example: Say you’re buying steel. Prices tend to drop during the wi

Introduction: Just like the human body, BOM is at the core of the factory Our bodies are made up of numerous organs and systems that work together to function as a perfect system. In a similar way, a factory is comprised of multiple departments that work in unison to efficiently produce products. At the heart of it all is the Bill of Materials (BOM), which serves as the blueprint for all factory operations. BOM plays a role similar to the DNA in the human body, providing the roadmap for every component and process to run smoothly. In this blog, we'll explore the comparison between the human body and a production plant, highlighting the importance of BOM and ways to improve operational efficiency. 1. Comparing the Human Body and a Factory: The Need for Seamless Collaboration Each organ in our body plays a specific role, maintaining balance for the whole system. Likewise, each department in a factory has a distinct function that contributes to the overall production process. Let’s di

 With Trump's return to office approaching, the U.S. policy landscape is set for significant changes. Today, we dive deep into three key areas that will reshape industries across the board: energy production, tariffs on Chinese products, and immigration restrictions. Let's explore what these changes mean, how industries can prepare, and suggest some potentially beneficial moves the Trump administration might consider to favor America and its allies. 1. "Shale Gas Surge: The Energy Revival and Its Ripple Effects" Trump’s promise to unleash America’s energy potential includes expanding shale gas production. The phrase "Drill, baby, drill" is back, and with it comes a host of implications for the global oil and gas market. The increase in shale production means the U.S. is positioning itself to compete head-to-head with OPEC. But what does that mean for different sectors? Impact on Oil Prices : A surge in shale production, coupled with Saudi Arabia's recent

  Hey there, folks! Today, we're diving into the language strategy of Donald Trump, the deal-maker extraordinaire and the 47th President-elect of the United States. Love him or hate him, there's no denying that Trump's way with words has been a game-changer. So, let's break down the top 10 words and phrases he's been throwing around during the 2024 election campaign and see what we can learn about effective communication and negotiation tactics. "Make America Great Again" When used: Consistently since 2016, still a key slogan in 2024 Effect: Tugs at the heartstrings, stirring up nostalgia and hope Negotiation strategy: Sets a clear, ambitious goal that's hard to argue with This phrase is like a time machine, promising to take us back to the good ol' days. I mean, who doesn't want to be great, right? Trump nailed it with this simple yet powerful message. In negotiations, painting a picture of a brighter future can be a real game-changer. 2. &qu