Energy & Utility Sector Driving Uncertainty In Strategic Sourcing

The increasing gravity of distributed generation, booming renewables and weakening demand are prompting providers to rethink Strategic Sourcing

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Monitoring Energy & Utility Market Dynamics To Identify Strategic Sourcing Challenges And Uncover New Opportunities

In today’s global economy, companies in the Energy & Utility sector dealing with strategic sourcing are understandably highly dependent on the intensifying market competition, backed with long-term uncertainty that has been conventionally ruling over the industry as we know it today. While the major indicators now point to the slowing growth in consumer demand, there are also several fundamental issues making things even worse, particularly in the realm of strategic sourcing. Taken in general, most of these challenges are currently all about the lack of investor confidence which naturally calls for diminishing accessibility to low-cost capital. Furthermore, it’s clear that shrinking utility profits become additionally squeezed by higher operational costs and the lack of control. There is also a certain extent of extra pressure having been forcefully released for over a decade already as distributed generation and eco-friendly technologies keep their rapid pace of maturation and global fulfillment.

Imminent Challenges And Potential “Game Changers” In Vendor Sourcing To Global Energy & Utility Sector

  1. Ongoing development of complex environmental statutory requirements for energy generation, maintenance and continuous update of the existing power grids — that calls every player in the Energy & Utility sector for putting in even heavier investments. At the same time, however, potentially weakening demand growth reported globally keeps exerting considerable financial pressure on the market.

  2. Progressively intensifying cross-sectoral trends (e.g., maturation of electric-powered vehicles, accompanied with newly-emerging infrastructure demands) representing lots of previously undiscovered commercial opportunities for tech development, broader access to low-cost capital and, therefore, potentially recovering long-term business sustainability amidst extremely competitive market faced with rapid and persuasive change.

  3. Emerging international policies and state-level regulatory initiatives (for example government subsidies, fiscal stimulus and so forth) gradually transforming into real economic drivers that would further encourage the existing slide in consumer demand, in line with promoting energy conservation, net-metering mandates and lots of other consequences — both the intended and unintended ones.

Key Value-Adding Opportunities Of Strategic Sourcing To Make Things Easier For The Energy & Utility Industry

As a result, today’s procurement leaders and supply chain teams in the Energy & Utility sector should be focused mainly on empowering their strategic decision-making in vendor sourcing so that it provides the greatest possible contribution to their overall profitability. For now, the experts still observe a narrowing room for the modern BI tools and industry-specific sourcing software innovation to ensure long-term business sustainability, solvency, and creditworthiness needed to resist global uncertainty by:

  • Working on accelerated and transparent process implementation in procurement to gain more visibility into spend and ensure operational savings targets are set accordingly
  • Leveraging procurement intelligence, using granular market and category-specific insights needed to spot new geographies and undeveloped regions for business expansion
  • Emphasizing alternative energy sources and their strong game-changing potential already posing a dire need to look for dynamic niche areas with a promising future
  • Driving proper diversification and industry innovation through advanced service areas focusing proactive vendor sourcing, strategic supplier discovery, stronger relationship management
  • Forging complex initiatives in supply management, strategic sourcing, and procurement to access volume discounts, bargaining risk-sharing with suppliers, preferred contract terms, etc.

 

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