The State of Procurement in the Mobile Industry

Transcription

1 RESEARCH REPORT: The State of Procurement in the Mobile Industry PRESENTED BY JANUARY 2016

2 The State of Procurement in the Mobile Industry Executive Summary Mobile Industry Colleague, We believe this to be the first ever research report focused solely on procurement in our industry. With 125 survey respondents representing companies of varying size, focus and geographic location, the results give a broad perspective into the successes, issues and challenges facing those who lead purchasing in our ecosystem. Our key findings are: Technology: Our industry is known for cutting edge technology. But do we leverage technology as much as we should in our procurement processes? Focus: With the incredibly fast growth of our industry, procurement is a key factor for success for our companies. We take sourcing seriously and try to make it a competitive advantage. Vendor Vetting: We are constantly on the lookout for new and innovative suppliers. When we find them, we use a wide range of tools to research and vet them to ensure they will be good partners. Information Sharing: We rely on our industry peers for recommendations about new products/services and vendors. But do we utilize information age trends like crowd sourcing, online reviews and user ratings to do this efficiently? Once you have read the research results, please flip back to page 14 of this report. There you will learn about GSMA Marketplace, a new online portal that is currently connecting over 2,200 industry sellers with 500 buyers. This new technology platform will address many of the opportunities and challenges mentioned above and represents the future of procurement for our industry. Sincerely, The GSMA Marketplace Team 2

3 The State of Procurement in the Mobile Industry Profile of Survey Respondents 125 mobile industry procurement professionals participated in this survey: Job Responsibility Total Company Employees Primarily focused on procurement 59% 10,000 or more 24% employees 31% Less than 100 employees Focused on procurement and other areas 41% 1,000 to 9,999 employees 20% 24% 100 to 999 employees Level in Company Specialist or Coordinator 6% Manager 45% Director 13% VP or Department Head 19% C-Level or Owner 16% What is your company s total annual procurement spend? Less than USD $100,000 7% USD $100,001 to USD $1,000,000 10% USD $1,000,001 to USD $10,000,000 18% USD $10,000,001 to USD $50,000,000 9% USD $50,000,001 to USD $100,000,000 11% USD $100,000,001 to USD $1,000,000,000 20% More than USD USD $1,000,000,000 24% Commentary: With 44% of responding companies spending over USD $100 million per year, we clearly have representation from some of the larger companies in the mobile ecosystem. However, in our experience working with buyers, company size is not necessarily directly related to the sophistication or efficiency of a company s procurement function. It s clear that companies of all sizes have the ability to improve their sourcing practices. 3

4 The State of Procurement in the Mobile Industry Current Buying Patterns How much of your company s procurement spend is done completely online (distributor website, B2B retail websites, marketplaces, esourcing or other online tools)? Between 51% and 75% 13% 6% More than 75% of procurement Commentary: For an industry as technologically advanced as mobile, relatively little procurement is conducted online. Are we relying on personal and existing relationships too much, at the detriment of Between 26% and 50% Between 11% and 25% 9% 11% 61% Less than 10% finding new suppliers that could offer better pricing or innovation? The online world offers access to a massive collection of new purchasing options and we need to leverage this channel. Do you expect the amount of online purchases your company makes to increase, decrease or stay the same in the next 12 months? Commentary: While we as an industry do not use online procurement channels as much as we Increase 52% probably should, it is positive that at least half of us expect online spend to increase. However, it is somewhat surprising that 45% expect their Decrease Stay the same 2% 45% online spend to remain flat. By how much do you expect this online procurement spend to increase in the next 12 months? 26% to 50% increase 51% to 75% increase 19% 2% 5% 76% to 100% increase in online spend Commentary: : While the slight majority of our respondents think that their online procurement will increase, they do have tempered expectations of this growth. With most projecting 25% or less growth, how long will it take online procurement to truly pervade the mobile industry? 74% 25% or less 4

5 The State of Procurement in the Mobile Industry Current Buying Patterns What channels do you use most frequently for your online procurement? Distributor or wholesaler website 48% Internal sourcing website or tool (i.e. Ariba) 35% Manufacturer website Online marketplace B2B retail website (i.e. Amazon Supply) 20% 16% 15% Commentary: Mobile industry buyers tend to rely on standard vendor and wholesaler website purchasing. While this is a relatively easy way to complete a purchase, it is difficult to compare multiple suppliers offerings side by side prior to making the purchase. Internal sourcing tools and online marketplaces are currently less prevalent, but allow this type of comparison, which increases competition amongst suppliers and can significantly lower prices. Buyers on GSMA Marketplace Now 5

6 The State of Procurement in the Mobile Industry Researching New Products and Services When you are researching new products or services to procure, what type of information is most critical for your procurement decision?* Price Technical specifications Industry technical specifications Independent analyst reports (Gartner, Forrester, etc.) Marketing or sales collateral Customer referral or review Customer case study Customer testimonial 11% 9% 7% 6% 4% 1% 73% 79% Commentary: As expected, price is king with technical fit coming in closely behind. Could we make more informed procurement decisions if we put more emphasis on listening to our peers in the form of customer referrals, reviews or rankings? When you are researching new products or services to procure, what type of information is most critical for your procurement decision?* Supplier representative or salesperson Supplier website Search engine results Industry specific online community Colleague recommendation Press releases Social media posts 4% 7% 15% 29% 28% 33% 58% Commentary: While it is good that we conduct in-depth research on products and services before we buy them, is it wise to rely so much on information provided by the potential supplier themselves? We should consider taking advantage of internet-driven trends like information crowd sourcing and user ratings to get better, less biased information. * Percentages may add up to more than 100% because multiple answers per respondent were accepted 6

7 The State of Procurement in the Mobile Industry Finding and Selecting New Vendors How do you most commonly find new vendors for products and services that your company already purchases?* Online research Attend tradeshows/conferences/events Seek referrals from colleagues and contracts Follow up on calls and communications from sales representatives Review marketing materials/advertisements Visit online marketplaces 13% 9% 9% 31% 58% 66% Commentary: While we love a good industry event (particularly GSMA Mobile World Congress), we need to also utilize other channels to find new vendors efficiently during the remaining 361 days of the year. We should consider using the power of the internet to expand the reach and scope of our vendor-seeking activity. When selecting a new vendor, what are the most important decision factors?* Price Quality of product/service Product fit for functionality Vendor reputation Customer service Speed of delivery Speed of response Wide selection of products/services Convenience 15% 9% 6% 6% 27% 26% 41% 68% 80% Commentary: Unsurprisingly, price is the factor that most often decides a purchase. However, if we put more emphasis on factors like quality, fit and customer service, could we avoid more post-purchase problems, which raise the total cost of ownership? * Percentages may add up to more than 100% because multiple answers per respondent were accepted 7

8 The State of Procurement in the Mobile Industry Vetting Potential New Vendors What type of information do you rely on the most when vetting potential new vendors to make sure they will be a good and stable partner?* Financial data Customer referrals 3rd party reports Customer reviews Information on product or services recalls Information on lawsuits or other legal issues Information on patents or trademarks 5% 25% 20% 33% 48% 45% 71% Commentary: The broad range of answers suggest a balanced approach to our vendor vetting processes. We need to make sure that we do not over-rely on financial information, as it does not tell us much about the quality or customer service of a potential vendor. It is heartening to see that so many of us utilize 3rd party sources and our peers for this type of information. What sources of information do you rely on the most when vetting potential new vendors to make sure they will be a good and stable partner?* Colleagues or industry contacts Public records (financial filings, etc) 3rd party vendors Online research using search engine Credit reports Supplier risk management services Vendor website Legal records (lawsuits, patents, etc.) Social media 10% 15% 20% 38% 36% 32% 31% 31% 50% Commentary: Again, we use a broad range of sources, with the most valuable being our industry peers. But are we collecting and processing this information in an efficient, tech-savvy manner? Similarly, we need to continue to rely on independent and 3rd party information sources, but find a way to access them efficiently. * Percentages may add up to more than 100% because multiple answers per respondent were accepted 8

9 The State of Procurement in the Mobile Industry Managing New Vendor Risk What are the primary strategies you have in place to minimize the risk of a new potential vendor?* 71% Multi-vendor sourcing 66% Ongoing monitoring of supplier performance (quality, delivery, etc.) 53% Vendor appraisal/prequalification 24% Supplier performance management program 21% Ongoing monitoring of supplier viability (financial, etc.) 11% Use external consulting services to manage risks Train procurement team in advanced supply risk management techniques No risk management strategies in place 9% 2% Commentary: New suppliers are critical to our industry for bringing innovation and managing cost. But are we relying too much on traditional, non-technical solutions to reduce the risk of non-performing vendors? Doing thorough research or prequalification on a potential vendor using modern technology tools can help to mitigate many issues before they arise. Products and Services Being Sourced with Active RFX on GSMA Marketplace * Percentages may add up to more than 100% because multiple answers per respondent were accepted 9

10 The State of Procurement in the Mobile Industry Procurement Process Improvements What areas are your procurement organization most focused on improving right now?* Consolidating and leveraging spend Optimizing supply chain costs Reducing total life cycle costs Reducing the number of suppliers Developing a supplier performance management program Performing spend analysis Restructuring existing relationships Acquiring and developing supply chain talent and skills Outsourcing non-core procurement activities Reducing internal demand Managing commodity price volatility 20% 20% 19% 14% 12% 8% 7% 29% 34% 42% 46% What areas would you like your procurement organization to most focus on improving in the next 12 to 18 months?* Consolidating and leveraging spend Optimizing supply chain costs 43% 43% Reducing total life cycle costs Restructuring existing relationships Reducing the number of suppliers Developing a supplier performance management program Acquiring and developing supply chain talent and skills Performing spend analysis Outsourcing non-core procurement activities Reducing internal demand Managing commodity price volatility 2% 8% 10% 18% 18% 35% 31% 26% 26% Commentary: As an industry, there is a lot of effort going towards improving our procurement processes. But are we fully utilizing the available technology to do so? We need to continue to develop and utilize cutting edge technology platforms that bring procurement up to speed with the mobile technology our companies produce. * Percentages may add up to more than 100% because multiple answers per respondent were accepted 10

11 The State of Procurement in the Mobile Industry Open Ended Questions What are your biggest procurement challenges? What solutions will solve these challenges? 11

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14 The State of Procurement in the Mobile Industry The GSMA Marketplace Connecting Buyers and Sellers in the Telecoms Industry The GSMA Marketplace is a new online portal designed to improve procurement in the mobile and telecom ecosystem. We currently have over 500 buyers and 2,200 sellers on board the platform. To date there have been over 83 active RFX on the Marketplace representing an estimated $96 million USD in value and future opportunity. Benefits of the Marketplace for Buyers include: Find and connect with new suppliers Reduce the time/cost/travel to buy Browse seller's storefront and catalogues Compare online RFP offers side by side Research suppliers or markets Compare Products and Services Side by Side SIGN UP FOR A FREE BUYER'S ACCOUNT NOW! Product/Service Search: find innovative offerings from new suppliers. Full RFP/RFX Capability: confidentially find and compare supplier offers. Message Centre: contact sellers to negotiate deals. Research Centre: analyze potential sellers with proprietary tools and data. Research Centre Heatmap Tool 10 User Licenses: use the Marketplace across your organization. Visit or Marketplace@GSMA.com Founding Sponsor: