As procurement within businesses takes on greater strategic value, buying professionals are asked to do even more with their limited time. This is particularly true when direct products are sourced, which needs keen attention outside of the company to several changing economic factors.
To make the best possible decisions without falling behind, procurement must ensure that it has access to and uses supply market information effectively. This three-part series first outlines the main pillars of Procurement market intelligence to help practitioners understand why, explaining why businesses seek out this capacity. As procurement within businesses takes on greater strategic value, buying professionals are asked to do even more with their limited time. This is particularly true when direct products are sourced, which needs keen attention outside of the company to several changing economic factors.
Introduction to Market Intelligence
Business intelligence is made up of 3 pillars. The first is market analysis, which mainly contains knowledge such as how to acquire it, how to access it, how to store and evaluate it, and the various approaches and applications to do so. Then comes competitive intelligence, which for strategic purposes consists of gathering data such as competitive dynamics, disruptors, and other value levers at play.
Elements of these two pillars play important roles in the creation of market intelligence, but the method of collecting and evaluating knowledge related to the supply markets of a business is the main final pillar. The goal of allowing correct and confident decision-making in the procurement process is ultimately supported by all three.
This type of knowledge, which forms the basis of the wider intelligence body, can come from anything as simple as searching for Google, reading commercial publications, or following one’s social media feeds, a selection of which may include a comprehensive “homegrown” approach to market intelligence. The most sophisticated techniques include triangulating several data inputs and streams by using third-party market intelligence sources, eventually resulting in a comprehensive organizational strategy.
Understanding Procurement Market Intelligence
You need to understand what it is and how the intelligence is gathered before you can fully explore the advantages of procurement industry data and analysis. Procurement market intelligence, such as by Google searches and other labor-intensive initiatives, can be dependent on manual analysis. Intelligence can also be focused on third-party providers that, for analytical purposes, collect data from multiple sources. Three primary aspects of procurement market intelligence must be aligned, regardless of the source of the data and those are:
- Market Research
The first element of accurate market intelligence is the determination of what kinds of information should be gathered and how to access it. Also, you must decide how to store and analyze the information. Although these sound like foundational principles, they lay the foundations for intelligence in the supply market and deserve sufficient, concentrated attention.
2. Competitive Intelligence
Competitive intelligence, which relates to the selection and examination of a multitude of variables that can be value levelers, is another essential aspect. Disruptors, competitive dynamics, and other factors can include these. Data must be obtained quantitatively in these fields.
3. Supply Markets Analytics
In addition to concentrating on these aspects, intelligence is often focused on analytics of the supply markets. The procurement specialist has to actively collect and evaluate reliable data on the particular supply markets of the business. As is the case with other variables that feed into the intelligence of the procurement industry, data related to supply markets often change frequently and rapidly.
Benefits of Procurement Market Intelligence
An effective market intelligence strategy for procurement will enable businesses to solve sourcing problems effectively and mitigate procurement risk successfully. That’s not all; here are how market intelligence in procurement can help businesses step up their performance:
I. Effective operations: If the procurement, supply chain, and inventory facilities of an organization are at the height of their effectiveness, they may get caught off balance by a sudden shift in the market, management, or operations of a supplier. With the aid of market intelligence in procurement, notifications can be set up to inform near-real-time changes in the companies of different suppliers, providing early notice of disruptions that might involve a rapid response or an alternative solution. Companies can also use this data to arrange, depending on the requirement, for ‘back-up’ vendors.
II. Competitive advantage: By being nimbler, more agile, and responding quicker than other market competitors, competitive advantage is gained. Leading businesses are now using their quick response to unforeseen disruptions as a competitive advantage. If a key component can be difficult to obtain, enterprises can lock up supply with the aid of procurement market intelligence that offers data real-time before their competition.
These are only a few benefits of focusing on procurement market intelligence and you will be thrilled to find out about the others as you begin working with it. If you haven’t yet stepped foot into this territory, find an expert who can help you sort your affairs out.