Originally published by Spendedge: Deal Benchmarking for an Emerging Automotive Manufacturer
Deal Benchmarking for an Emerging Automotive Manufacturer
Client Requirement
An emerging automotive manufacturer sought to replicate the success of previous deals across its supply chain by forming strategic partnerships with consistent guidelines, expectations, and frameworks. Unsure of the optimal approach, the company consulted SpendEdge for expertise in deal benchmarking to establish supplier relationships and business partnerships akin to their past successful deals.
Types of Benchmarking in the Automotive Industry
Deal Benchmarking
Deal benchmarking involves assessing the terms and conditions of business deals to ensure they align with industry standards and the company’s objectives. This process helps evaluate the quality and value of agreements to ensure they meet established benchmarks.
Price Benchmarking
Price benchmarking involves comparing a company’s pricing strategies with those of competitors to ensure that prices are competitive and offer value to customers. This approach helps set pricing that reflects current market conditions.
Supplier Benchmarking
Supplier benchmarking evaluates the performance and capabilities of suppliers to identify the most suitable partners for sourcing materials and components. It ensures that suppliers meet necessary standards for quality and reliability.
Performance Benchmarking
Performance benchmarking measures key performance indicators (KPIs) against industry standards to identify areas for improvement in processes and products. This approach assists companies in tracking their performance and making necessary adjustments to stay competitive.
Teardown Benchmarking
Teardown benchmarking involves disassembling vehicles to analyze their components and performance. This technique provides insights into design and manufacturing practices, helping companies understand industry standards and foster innovation.
Importance of Deal Benchmarking in the Automotive Sector
Deal benchmarking is crucial for aligning with industry standards, gaining a competitive edge, and meeting consumer expectations. By comparing potential deals with existing, past, or industry benchmarks, companies can assess the quality, value, and sustainability of agreements. This approach supports informed decision-making, strengthens negotiation positions, and fosters mutually beneficial partnerships. Understanding relevant metrics and KPIs is essential for ensuring deals meet necessary standards and align with benchmarks.
Primary Metrics in the Deal Benchmarking Process
Strategic Alignment
Strategic alignment ensures that deals and partnerships support the company’s broader objectives. This metric evaluates which deals and partners will drive growth while minimizing conflicts, leading to productive and long-term relationships.
Cost
Cost benchmarking involves assessing the total expenses related to deals to ensure they stay within budget constraints. This process helps identify effective pricing strategies and manage cost fluctuations, aligning deals with strategic goals.
Targets and Goals
This metric compares new deals with past successful partnerships to ensure they meet predefined performance targets and objectives. It aids in evaluating potential deals and setting clear expectations, driving better outcomes and achieving strategic goals.
Delivery and Quality
Evaluating the timeliness and quality of deliverables ensures they meet agreed-upon standards. Comparing potential suppliers’ offerings with those from previous deals helps avoid delays and additional costs, strengthening supplier relationships.
Communications
Effective communication among stakeholders is essential for successful deals. Assessing communication practices helps establish clear guidelines and systems, promoting transparency and collaboration throughout the deal process.
Success Story – SpendEdge Advantage
Solution Offered
SpendEdge leveraged its 18 years of expertise to provide the automotive manufacturer with customized advice and strategic solutions. By analyzing the company’s goals and expectations for potential partners, SpendEdge identified strategies that addressed immediate needs and supported long-term growth. Their insights helped the client navigate complexities, make informed decisions, and establish strategic partnerships that aligned with their objectives.
Outcome
The automotive manufacturer successfully developed a contract management plan that outlined terms and expectations for supplier relationships. This plan allowed the company to choose suppliers that aligned with its operational goals and values, improving supply chain efficiency. Deal benchmarking offered valuable insights into industry standards and competitive practices, facilitating favorable negotiations. These efforts resulted in strong, collaborative partnerships, enhanced procurement processes, and a strengthened competitive position in the automotive market.