How Exiger Is Reducing Costs for Businesses with Material Demand Aggregation

One benefit a robust supply chain management practice for your enterprise can deliver is cost savings. And one of the main drivers of this efficiency is material demand aggregation.

What Is Material Demand Aggregation?

Material demand aggregation (MDA) is a process that gives businesses the ability to aggregate material and demand information from both upstream suppliers and downstream business affiliates, enabling them to identify efficiencies and make more informed decisions about their supply chain operations. 

It’s a process perfected by Exiger that takes the aggravation out of sourcing materials and parts across many tiers of the supply chain, particularly for large, global enterprises and original equipment manufacturers (OEMs).

MDA answers questions like, “Who buys what materials, in what quantities, when, and at what prices?” It is a methodical and technology-driven strategy that leverages shared raw material and off-the-shelf component demand across multiple sites and sub-tier suppliers. This approach efficiently manages various aspects such as price, inventory, service levels, cycle time and accountability throughout the extended supply chain, resulting in optimized operations and reduced costs.

This way, demand forecasting can translate into better prices and service levels for manufacturers and parts suppliers as well as greater efficiency for distributors and mills you choose to do business with — making it an invaluable tool for cost reduction.

Find Cost Savings Across All Tiers of the Supply Chain

Material demand aggregation uses intelligent automation algorithms and analytics technology that can help reduce inventory levels and ultimately decrease lead times for delivery. Some original equipment manufacturers (OEMs) using the material demand aggregation approach as part of Exiger’s supply chain management platform were able to reduce procurement and raw material costs by up to 25%.

By leveraging our tech expertise and in-depth understanding of global markets and proprietary resources, Exiger offers a supply chain management platform with end-to-end visibility that can not only help you anticipate and mitigate supply risks but also save money on purchases ranging from spare parts to large-scale manufacturing components by aggregating demand.

Our technology also allows for supply chain management orchestration and optimization, meaning businesses benefit from improved cost-of-goods sold and  enhanced efficiency. This can lead to lowered acquisition costs for common parts and materials, shorter lead-times, more standardized material-inputs and improved supply-partner relationships.

Exiger technology provides unique insights into supplier sourcing and performance, helping businesses ensure that their suppliers are meeting or exceeding quality and sustainability standards. This helps you minimize reputational risks associated with your suppliers, including their operations and the products, components and materials they supply.

Material Demand Aggregation Adds Procurement Flexibility

MDA enables businesses to understand the pros and cons of various material-input sourcing models such as spot purchasing, directed buy, right to buy, buy/resell, and consignment. By aggregating critical data pertaining to common materials across the entire supply chain, it provides an in-depth view of opportunities for collaborative purchasing, lead-times, supply concentrations and early warning of disruptions.

For example, understanding the fluctuating prices of raw materials can reveal opportunities to purchase in bulk, forward buy, or delay purchasing altogether while waiting for more favorable pricing conditions to arise.

Material demand aggregation also helps you identify areas where spending could be optimized: switching to a different sourcing model, renegotiating existing contracts, or simply rationalizing and simplifying your supply base. It provides insights into which suppliers offer better returns on investment and allows you to make decisions based on real-time data rather than relying solely on past experiences.

A Way to Optimize Raw Material Sourcing

Our unique technology can also help you better prioritize your raw material sourcing activities. By enabling the forecasting of both internal and external (n-tier supplier) demand data into one easy-to-understand platform, it’s easier than ever to determine when and from where materials should be sourced. This reduces the costs associated with procuring raw materials, by taking advantage of volume-based discounts and minimizing ‘mill-minimum’ or ‘minimum order’ quantities.  It also tends to enhance service levels.

Finally, material demand aggregation will allow you to standardize material sizes and specifications and quickly identify alternate sources of supply in case of an unexpected shortage or disruption in supply. This helps to reduce downtime due to supply chain delays and minimize expenses associated with reordering materials from alternate suppliers.

The 1Exiger platform gives you end-to-end visibility that includes item-level visibility, which is critical to material demand aggregation. You can intelligently identify the population of critical parts that may be subject to constrained raw material supply, extreme price volatility or limited transformation capacities. This is the strategy and approach that delivers maximum value. 

Businesses that use Exiger’s technology for supply chain visibility and mapping can gain a competitive advantage by improving their cost and efficiency while ensuring compliance. Contact us for a personalized demo of the 1Exiger platform. 

More Resources:

• Supply Chains Need Better Risk Management
• ICT Supply Chain Risk Management: Critical Aspects to Consider
• Expert Tips on C-SCRM and Building a Trusted Software Supply Chain