Silos Category Procurement Intelligence Report

The market for Warehousing and Storage and its sub-segments such as Silos are at an interesting intersection. Rise in minimum labor wages across countries such as the US and China will result in increased employee expenses for Silos suppliers who will be forced to pass on a part of this increase to their buyers.

Service providers have begun to use advanced technologies and tools such as loT, predictive analysis and big data for optimal asset utilization, geofencing, warehouse management, and smart inventory management. The efficiencies gained by using new technology and improvement in customer service capabilities are significant. More and more suppliers are moving towards adopting these technologies to realize significant efficiency gains in the longer run, however, it may also increase their OPEX in the short run.

Businesses are focused on maintaining a lean inventory of raw materials, parts, components and finished goods. While it is a novel concept to keep the inventory costs in check, it also highly challenging to implement in a global sourcing context and requires a clock work like optimization of logistics and warehousing processes. Companies are moving to a completely digital supply chain footprint to reduce errors and risks associated with such strategies.

Trends like these and many others discussed in this report are necessitating a relook at the way Silos is procured and the procurement cost saving opportunities that exist.

It has become imperative for category managers to remain as agile as possible in terms of their procurement practices. However, it is not always easy to quickly spot and implement alternative practices in a category like Silos. To help quick decision making, this report advises on several procurement best practices that have worked well for category managers.

For example, Buyers should enter in long-term partnerships and collaborative relationships with service providers to benefit from economies of scale and reduced cost. Long-term contracts are established to avoid renewal costs and avoid time spent on renegotiation.

Buyers should assess service providers' capability of predicting the weather, traffic, and other real-time information, which might affect shipments that are in transit or in its delivery times.

Buyers need to assess the level of automation provided and time required to obtain process efficiency, apart from checking if suppliers have the correct documentation for as-is processes and to-be processes to avoid any conflicts in implementation.

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