LONDON--(BUSINESS WIRE)--According to the latest procurement market intelligence report from Technavio, the global fuel oil utilities market is expected to grow at a CAGR of approximately 3% over the next five years due to the growth of transport infrastructure in developing economies.
The research report titled ‘Global Fuel Oil Utilities Market: Procurement Market Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning, and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“The growth is predominantly driven by increased demand for fuel oil in ground transportation and aviation sectors. The demand for fuel oil is high in developing countries of APAC such as China, India, Thailand, and South Korea as these nations are investing heavily in transportation and power generation infrastructure,” says lead Technavio procurement specialist Angad Singh for category spend intelligence. “Fuel oil suppliers have invested heavily in advanced technologies such as automated drilling and 3D seismic imaging techniques to reduce costs of production and subsequently increase profit margins for refined fuel oil products,” added Angad.
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Cost saving opportunities in fuel oil utilities
The adoption of various cost optimization levers helps buyers of fuel oil utilities realize cost savings and achieve category management and value benefits (including the reduction in procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the fuel oil utilities market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
Oil explorers use seismic surveys to produce detailed images of the rock types and their location beneath the surface of the earth. Explorers use this information to determine the location and size of oil reservoirs.
3D seismic techniques help suppliers to locate reserves that were previously missed by less sophisticated techniques. Also, this technique gives scientists better information regarding the subsurface before drilling.
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Optimization of procurement practices saving aspects
Buyers should list down the quantity, grade, and variety of fuel oils that is needed from fuel oil suppliers. Buyers should assess the economic and political conditions of the suppliers' location since it may affect the production and supply of fuel oil.
Buyers must ensure that suppliers adhere to their committed delivery time and that they implement measures that can minimize turn-around-time for buyers' operation. Buyers should assess countries with low operating costs (local commodity costs, labor charges) as an alternative sourcing destination.
Bundling of services saving aspects
Buyers prefer to engage with fuel oil suppliers that can provide a continuous supply of fuel oil through safe transport systems (tankers, railroads, or pipelines) during the term agreed on in the SLA. Suppliers should ensure that right quantity (bpd or tanks per day) of fuel oil is delivered to buyers on a daily basis.
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Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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