Modems Category Procurement Intelligence Report

A changing ecosystem within the Networking market also affects the procurement process, cost dynamics and supplier attractiveness for the buyers of Modems. Stringency in the regulatory norms pertaining to data protection and cybersecurity has increased compliance and security burden on suppliers. These additional costs have a potential to drive marginal increase in prices across the key geographies.

Buyers are showing an inclination to onboard suppliers whose offerings span beyond Modems. The practice brings in several advantages such as rationalization of supplier base, economies of scale and reduced category management cost.

The cut-throat competition in the category is compelling suppliers to go aggressive on their pricing structure and increase their spend on sales and marketing activities. As a result, most suppliers are feeling a pressure on their margins and trying to offer higher margin value added services to have a better control on their profitability.

Sometimes, procurement functions are unable to timely alter their practices while responding to market conditions. Industry experts acknowledge that periodically reviewing procurement best practices and adopting learnings from across procurement categories can help procurement teams respond to market needs in a more agile way. This report combines our experience of other categories with Modems procurement insights and hand picks best practices that can work for category managers delving in this market.

For example, Investing in benchmarking studies not only helps category managers to improve their knowledge about market pricing or billing rates but also in negotiating with suppliers. In fact, this holds true for all technology procurement sub-categories.

Buyers must clearly define clauses pertaining to the ownership of subcontracting services that are not a part of preferred suppliers' portfolios. Subcontractors should be bound by the same terms and conditions as the main contractor to ensure consistency in quality and manage any adverse event such as data breach.

Developing a strong understanding of the potential vulnerabilities of service providers can help buyers limit their potential losses and also gives the bargaining power to demand services from more robust measures in the SLA.

Modems procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Modems procurement. Some examples include: