Auto Manufacturer Saves 14% On Direct Material Costs with TraceData Research-Driven Sourcing

Client Background
The client is a tier-1 automotive component manufacturer supplying to leading OEMs across North America and Europe. With a complex global supply chain and a wide range of direct material inputs, the client faced growing pressure to optimize sourcing decisions without compromising on quality or compliance. Their procurement team had historically relied on legacy vendor relationships and internal cost benchmarks but was now seeking a more data-backed, agile approach to sourcing.

Challenges They Faced
Despite operating at scale, the client struggled with few critical sourcing challenges:

• Fluctuations in the prices of metals and synthetic components created instability in procurement budgets across quarters.

• The client was dependent on multi-region suppliers but lacked access to actual cost breakdowns, making it difficult to assess margin fairness or renegotiate effectively.

• With 70% of direct material sourcing tied to long-standing suppliers, the procurement team had limited leverage and minimal exposure to emerging or cost-efficient alternatives.

• There were no updated internal benchmarks to compare supplier quotes against real-time market rates, weakening the client's negotiation power.

To more about our Procurement Research Services @ https://www.tracedataresearch.com/procurement-market-research

These challenges were directly impacting both sourcing efficiency and profitability, prompting the client to seek data-backed procurement intelligence.

Approach
TraceData deployed a structured, three-phase methodology designed to discover cost inefficiencies and enhance supplier negotiations:

1. Supplier Cost Benchmarking Across Five Countries: We mapped supplier pricing structures for the client's top 10 high-spend direct material categories, across India, Vietnam, Thailand, Mexico, and Poland. This included metals, melded components, and engineered parts.

Our team analysed:
• Per-unit cost variance across geographies
• Input-to-output cost ratios for equivalent SKUs
• Historical pricing trends to identify supplier margin inflations

2. Should-Cost Modelling for Top 5 Components: Using granular cost modelling, we broke down each part's fair market price by factoring in:

• Raw material prices (sourced from global commodities databases)

• Labor rates by country

• Overhead and logistics assumptions (based on factory audit data)

3. Vendor Re-Evaluation & Negotiation Support: We presented our findings during supplier negotiation rounds and supported the client in:

• Re-aligning contracts with four legacy vendors
• Onboarding two new suppliers from Southeast Asia with better cost-to-quality ratios

• Designing KPI-based contracts focused on delivery timelines and price indexing

Check How TraceData Strategic Procurement Research Helps Businesses Save Costs and Reduce Risk @ https://www.tracedataresearch.com/blog/strategic-procurement-research

Outcome
The sourcing transformation delivered measurable results within a single quarter:

• Through vendor rationalization and should-cost renegotiations, the client achieved an average savings of 14% across high-spend categories.

• By shifting to regionally aligned suppliers with consistent output quality, the average delivery timeline dropped from 35 days to 23 days.

• Should-cost models are now used internally by the client's procurement team as a negotiation baseline and budgeting tool.

• By introducing clear benchmarking and KPI tracking, supplier performance improved across reliability, responsiveness, and adherence to service-level agreements.

Client Testimonials
"Partnering with TraceData gave us a strategic edge in supplier negotiations. Their rigorous market analysis and cost modeling exposed inefficiencies we had previously overlooked."

- Chief Procurement Officer, Global Automotive Firm

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TraceData Research is a full-stack market research company founded by research professionals with over 15 years of industry experience. The company is recognized for its proprietary methodologies, deep consumer understanding, high-quality research, and entrepreneurial mindset.

This release was published on openPR.