As per a Gartner review, nearly 65% of the organizations use vendor consolidation to improve risk posture, while 29% to reduce spending on licensing. Vendor consolidation is important to streamline procurement operations and maximize efficiency for sustainable growth. When you reduce the number of vendors, you unlock many benefits, including cost reduction, streamlined procurement, improved visibility, and more. Let’s understand these benefits and learn some of the best vendor consolidation tactics to easily overcome process challenges . 

Four Significant Benefits of Vendor Consolidation 

Let’s take a look at some of the key benefits of vendor consolidation. 

Cost reduction 

Where 60% of procurement costs result from logistical delays, vendor consolidation is the best way to optimize your cash flow. For instance, you can place a higher volume of orders at better prices and reduced shipping costs. In a study by CIO Tech Talk Community, 95% of respondents confirmed that they are seriously considering vendor consolidation in the next 12 months, with 69% citing finance-driven cost-cutting as one of the major driving forces. 

Streamlined Processes

What if you can save your valuable time and minimize errors through an effective vendor consolidation? Nowadays, well-maintained vendor management systems are also helping CPOs automate routine tasks related to vendor interactions from a centralized platform. For instance, you can provide vendors with secure access to important documents so that you can get relief from administrative burdens. 

Improved Visibility and Control 

In a recent study, only 6% of the participant companies admitted to having full visibility into their supply chain. When you manage multiple vendors, keeping a tap on the overall spending and performance becomes a challenge. Through consolidation, you can track expenditures and performance KPIs more effectively. For more clarity, you can go through this case study to understand how Moglix helped a leading adhesive manufacturer attain supply chain visibility across 70 plants through vendor consolidation. 

Strengthened Supplier Relationship 

Several reasons, such as the conflict in Ukraine, the rising cost of oil, and the global economic downturn, have significantly contributed to supplier chain disruptions worldwide. It’s costing companies an average of $184 million per year. Consolidating vendors can help companies foster a stronger collaboration with suppliers to get priority during supply chain disruptions. 

Evaluating and selecting vendors for consolidation: a strategic approach 

Here are some key steps to perform a thorough evaluation for vendor consolidation. 

Vendor assessment 

You should use several key factors to do vendor assessment; only pricing structure does not suffice. Look for strengths, weaknesses, and overall performances. For instance, for assessing vendors for office supplies, consider their pros, such as product selection, eco-friendly product line, and reliable delivery, as well as their weak spots, such as customer service and pricing structures. Those who stand tall on all your diverse requirements should be considered for consolidation.  

Financial Health 

As per the Corporate Finance Institute, four major aspects are highly useful for financial health analysis: income statement, balance sheet, cash flow statement, and rates of return. 

You can use various techniques, such as horizontal, vertical, or ratio analysis, to get information about your vendors’ financial performance and position. 

Negotiation contracts 

Imagine having access to the spending patterns of your vendors to leverage better deals during negotiation. This is one of the best ways to consolidate vendors. Unfortunately, only 5% of organizations use expense data for negotiations with vendors. They feel it’s a tiresome process. However, this is very much possible by using technologies to gather accurate data through an ideal vendor management system. 

Are you looking forward to consolidating vendors to reduce costs and achieve great visibility?
Partner with Moglix Solutions! Visit our website to learn more.

References

• https://www.gartner.com/en/newsroom/press-releases/2022-09-12-gartner-survey-shows-seventy-five-percent-of-organizations-are-pursuing-security-vendor-consolidation-in-2022
• https://www.karboncard.com/blog/5-ways-payout-vendor-consolidation
• https://www.cio.com/article/657327/what-it-executives-are-saying-about-vendor-consolidation.html
• https://cashflowinventory.com/blog/supply-chain-statistics/
• https://business.moglix.com/case-studies/moglix-consolidates-the-vendor-base-across-70-plants-for-leading-adhesive-manufacturer?utm_source=website&utm_medium=blog&utm_campaign=How+Businesses+Can+Drive+Efficiency+Through+Vendor+Consolidation
• https://www.statista.com/statistics/1259125/cost-supply-chain-disruption-country/
• https://corporatefinanceinstitute.com/resources/accounting/analysis-of-financial-statements/
• https://www.emburse.com/assets/pdfs/using-your-data-for-negotiations-with-vendors-infographic.pdf

As per the Paris Agreement, all nations worldwide are committed to reducing greenhouse gas (GHG) emissions by 45% by 2030 and reaching net zero by 2050. In this regard, reducing emissions from various industries is a great challenge. This is especially challenging for hard-to-abate industries like steel, cement, and chemicals. These industries are crucial for economic development. Yet, they account for about 30% of the world’s greenhouse gas emissions. The CCUS technology (carbon capture, utilization, and storage) is a possible solution. Let’s understand how CCUS is an ideal investment for Indian CEOs of hard-to-abate industries to tackle GHG emissions effectively. 

What is CCUS? 

CCUS represents a series of processes to capture CO2 directly from fossil, biomass stations, industries, or air and convert it for various applications. Once captured, the CO2 is transported by ship or pipeline to the point of storage or application. There, it gets processed for various applications. Majorly, it is used for enhanced oil recovery (EOR) or the production of low-carbon fuels like methanol. The same can be used as an input or feedstock to create products or services. Otherwise, the CO2 is securely stored in geological formations so that it does not enter the atmosphere and harm the climate balance.  .php?post=24032&action=editCCUS represents a series of processes to capture CO2 directly from fossil, biomass stations, industries, or air and convert it for various applications. Once captured, the CO2 is transported by ship or pipeline to the point of storage or application. There, it gets processed for various applications. Majorly, it is used for enhanced oil recovery (EOR) or the production of low-carbon fuels like methanol. The same can be used as an input or feedstock to create products or services. Otherwise, the CO2 is securely stored in geological formations so that it does not enter the atmosphere and harm the climate balance.  

What CCUS Technologies Are Available Today? 

Some major CCUS technologies are available today to handle carbon emissions easily. Let’s understand how CO2 is processed under these CCUS technologies. 

• Direct Air Capture (DAC): Collected directly from the using air filters  
• Carbon Capture at Power Plants: CO2 is captured from power plants and processed for storage or enhanced oil recovery.  
• Enhanced Rock Weathering (ERW): Crushed silicate minerals like basalt and glauconite increase the soil’s CO2 capture capacity. 
• Aqueous Amine-Based CO2 Capture: Using amines to absorb CO2 for storage or reuse 
• Membrane Gas Separation: Using permeable materials to separate carbon dioxide and other gasses at low temperatures and pressures 
• Carbon Capture and Conversion: Converting the captured CO2 into usable products such as fuels, industrial chemicals, and polymers. 
• Chemical looping: Using metal-based particles to separate CO2 from the fuel for storage and further reuse  

• Cryogenic Carbon Capture (CCC): Leveraging cryogenic cooling to capture and remove CO2 from gas streams 
• Carbon Capture Using Nanotechnology: Carbon nanotubes capture CO2 at a very low pressure  

CCUS Global Application and Potential in India 

CCUS has been gaining popularity for its effectiveness in handling carbon footprints from the environment. As per the IEA report, around 40 commercial facilities have benefited from applying CCUS to their industrial processes. It has been used as one of the primary ways of carbon capture and utility storage. Though CCUS deployment slowed down in the past, in recent years, it’s been under development for over 500 projects across the CCUS value chain.  

How will Implementing CCUS Benefit Industries? 

CEOs in India can leverage CCUS to:  

• Meet Net-Zero Goals: India has committed to achieving net-zero emissions by 2070. In this regard, CEOs of hard-to-abate industries can use CCUS, which has already been a proven and effective method worldwide, to contribute significantly to achieving this ambitious green transition. 
• Improve Energy Security: Companies can utilize the captured CO2 for EOR, like in the Ankleshwar oil field CO2-EOR project in Cambay Basin, India. This can enhance India’s energy security by extracting more oil from existing fields. As a result, it can reduce dependence on imported fuels and strengthen energy independence. 
• Creating Economic Opportunities: The application of CCUS in Industries will unlock new job opportunities in India. Companies would require manpower to construct, operate, and maintain CCUS technologies, which will indeed create a positive economic impact. 
• Have a Competitive Edge: As the global market increasingly focuses on low-carbon products, adopting CCUS allows Indian industries to remain competitive and adapt to changing market demands. 

End Game: Accelerating Clean Energy Transition in India  

For CEOs of hard-to-abate industries in India, CCUS is not just an option but a strategic necessity. CCUS application can promise industries long-term sustainability, contribute significantly to India’s green transition goals, and create a cleaner and brighter future for the nation. As the world moves towards a low-carbon future, adopting CCUS allows Indian industries to have a competitive edge in the market and attract new investors. 

Are you looking forward to stepping up your industry’s strategy to reduce carbon emissions? 

Visit our website to learn how Moglix Business custom fabrication solutions can accelerate your clean energy transition

Imagine you’re a confident project manager, all set to complete the project on time and within the budget. Your team starts working tirelessly to meet the deadlines – and then an unexpected risk that you never saw coming halts your project. Now, you have no idea how to get back on track and complete the project. However, you might have prepared to overcome the challenge only if you had assessed its probability through a risk incident matrix.  

What is an Incident Matrix? 

Regarding project management, the incident matrix is a structured framework that clubs potential hazards into different groups based on their severity and likelihood. That’s why it serves as a roadmap for COOs of EPC infrastructure project developers to create predefined response plans with necessary actions for each scenario. When COOs use the incident matrix with advanced AI technologies, they develop robust, agile responses to handle downtime, keeping workforce safety and ideal project momentum as priorities. 

How to Use the Incident Matrix to Create Agile Responses 

1. Alert Comes In: Predictive AI 

The first step is to detect potential issues well in advance through predictive AI accurately. AI can analyze vast data to identify patterns in this initial stage. By continuously monitoring various project parameters, such as equipment sensor readings, weather forecasts, and historical incident data, predictive AI can anticipate potential issues before they escalate into full-blown incidents. 

For instance, the predictive AI system monitoring bridge construction might detect abnormal sensor readings in line with a potential structural issue to raise early warnings. This can help the COO to be proactive and initiate additional inspections to prevent a more serious incident. 

2. Diagnose: Generative AI 

Once an alert is triggered, the next step is to understand the nature and root cause of the incident. Traditionally, this diagnosis relied on human expertise and experience. However, being trained on vast datasets of such incident scenarios, generative AI can suggest an ideal course of action backed with real-time insights. For example, it can highlight potential causes of a rotor malfunction in a rotating shaft based on past sensor data analysis to help maintenance teams save time.   

3. Repair: Operations & Maintenance Procurement 

With the correct diagnosis, COOs use the incident matrix to decide on an appropriate repair strategy. Depending on the class of severity and degree of urgency, the COO might initiate the procurement of safety goods, spare parts, or specialized repair services. 

Here, maintaining an efficient infrastructure supply chain becomes crucial to promptly collecting all necessary resources, minimizing downtime, and easily reducing potential safety risks. 

For example, suppose a faulty safety harness needs to be replaced on a construction site. In that case, the COO can utilize pre-established procurement channels to expedite the acquisition of a new harness without compromising worker safety at any cost. 

4. Correct Behavior: FMEA Analysis 

As per the PMI, analyzing risks is extremely important in project management.  By incorporating FMEA principles (Failure Mode and Effect Analysis) into the incident matrix, COOs can use past incidents as valuable learning experiences. FMEA is a systematic approach to identifying potential failure modes within a system, analyzing their effects, and implementing corrective actions to mitigate those risks. Siemens uses FEMA to detect failure modes in components by starting with functional requirements analysis of the parts, which includes warping, electrical short circuits, oxidation, and fracture.  

5. Replace: Project Procurement 

Sometimes, the incident might necessitate replacing a faulty component or system. Under such a scenario, COOs use efficient project procurement practices for the timely acquisition of replacement parts or equipment with minimal disruption to the project schedule. With procurement automation, it’s possible to reduce the purchase order cycle by 75% and invoice processing costs by up to 90%.  

End Game: Enabling Agile Responses for Safety 

When combined with AI and efficient procurement practices, the incident matrix empowers COOs of EPC infrastructure project developers to craft agile and effective responses to unforeseen incidents. Using this framework, COOs can minimize downtime and project delays through prompt detection. It can also help in enhancing safety by proactively addressing potential hazards. To summarize, the incident matrix is the key for COOs to reduce project costs by preventing recurring incidents with an efficient procurement process in place. 

Do you want to craft agile and effective responses to unforeseen incidents by leveraging an incident matrix powered by digital supply chain transformation? 

Explore Moglix Business procurement solutions and best practices on safety to learn more.