Report The State of Procurement in the Mobile Industry

RESEARCH REPORT:

The State of Procurement in the Mobile Industry

JANUARY 2016

PRESENTED BY

2


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 www.GSMAMarketplace.com

3


Profile of Survey Respondents

125 mobile industry procurement professionals participated in this survey:

Job Responsibility Total Company Employees

Primarily focused on procurement

Focused on procurement and other areas

59% 24%

41%

31%

20% 24%

Less than 100 employees10,000 or more

employees

1,000 to 9,999 employees

100 to 999 employees

Level in Company

What is your company’s total annual procurement spend?

Specialist or Coordinator

Manager

Director

VP or Department Head

C-Level or Owner

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.

Less than USD $100,000

USD $100,001 to USD $1,000,000

USD $1,000,001 to USD $10,000,000

USD $10,000,001 to USD $50,000,000

USD $50,000,001 to USD $100,000,000

USD $100,000,001 to USD $1,000,000,000

More than USD USD $1,000,000,000

7%

10%

18%

9%

11%

24%

20%

6%

13%

16%

19%

45%

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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)?

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

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.

61%

13%

11%

9%

More than 75%of procurement

Between51% and 75%

Between11% and 25%

Less than 10%

6%

Between26% and 50%

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

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

online spend to remain flat.

Increase

Decrease

Stay the same

52%

2%

45%

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?

By how much do you expect this online procurement spend to increase in the next 12 months?

74%

19%

76% to 100%increase in online spend51% to 75%

increase

25% or less

5%

26% to 50%increase

2%

5


Current Buying Patterns

What channels do you use most frequently for your online procurement?

Distributor or wholesaler website

Internal sourcing website or tool (i.e. Ariba)

Manufacturer website

Online marketplace

B2B retail website (i.e. Amazon Supply)

48%

35%

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

6


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

79%

73%

11%

9%

7%

4%

6%

1%

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

58%

33%

29%

28%

15%

4%

7%

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?

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

7


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

66%

58%

31%

13%

9%

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.

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

80%

68%

41%

27%

26%

9%

15%

6%

6%

When selecting a new vendor, what are the most important decision factors?*

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?


9%

8


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

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

71%

50%

48%

38%

45%

36%

33%

32%

25%

31%

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.

20%

31%

5%

20%

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?*


15%

10%

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.

9


Managing New Vendor Risk

What are the primary strategies you have in place to minimize the risk of a new potential vendor?*

Multi-vendor sourcing

Ongoing monitoring of supplier performance (quality, delivery, etc.)

Vendor appraisal/prequalification

Supplier performance management program

Ongoing monitoring of supplier viability (financial, etc.)

Use external consulting services to manage risks

Train procurement team in advanced supply risk management techniques

No risk management strategies in place

71%

66%

53%

24%

11%

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.

9%

2%


21%

Products and Services Being Sourced with Active RFX on GSMA Marketplace

10


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

46%

42%

34%

29%

20%

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.

19%

14%


12%

8%

7%

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

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

43%

35%

31%

26%

26%

18%

18%

10%

8%

2%

20%

43%

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What are your biggest procurement challenges?


Open Ended Questions

What solutions will solve these challenges?


The GSMA Marketplace

Connecting Buyers and Sellers in the Telecoms IndustryThe 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

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.

10 User Licenses: use the Marketplace across your organization.

Visit

www.GSMAMarketplace.comor email

[email protected]

Founding Sponsor:

Compare Products and Services Side by Side

Research Centre Heatmap Tool

Report The State of Procurement in the Mobile Industry

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