Procurement Market Intelligence is the foundation of the procurement process's decisions. Market intelligence on the material or product purchased, its cost, the supply available, and other information about the market is crucial to facilitate negotiating the most advantageous deals. Because these parameters can change, keeping them updated is crucial.
The procurement department should be well-informed and have up-to-current information about the product to be purchased. The top suppliers of this particular product should be recognized. The advantage for the company is that the material is purchased at the best prices and delivery dates from a reliable source. A poor choice of supplier could negatively impact the business's manufacturing process and its financial results.
To obtain the greatest price, the purchasing team should be aware of the market's prices. It is only when costs of labor, transportation, and other costs are considered that the procurement team can more effectively negotiate a fair and reasonable price.
Market intelligence for procurement could be based on research conducted manually, like Google searches and other labor-intensive tasks. The information could also be based on third-party services which collect data from a variety of sources for analysis. Whatever the source of information, three major aspects of market intelligence for procurement need to be in sync.
The primary aspect of solid market intelligence is determining what kinds of data should be taken into account and how it is accessible. Furthermore, it would help if you decided how the data would be kept and processed. While these might seem like common ideas, they are the foundation of market intelligence and warrant an extensive, focused focus.
A third important aspect includes competitive intelligence. This refers to analyzing and gathering many variables that could be considered value levelers. This could include disruptions, competitive dynamics and many other aspects. These areas of data must be collected quantitatively.
Supply Markets Analytics
Apart from paying attention to these aspects and focusing on these elements, intelligence also relies on supply market analysis. Procurement professionals must constantly collect and analyze precise information about the company's supply markets. Similar to other aspects that feed into the procurement market intelligence, data regarding supply markets can change often and swiftly.
Because many intricate elements in procurement analysis require adequate attention, the manual method of gathering data isn't always efficient or practical in all businesses. But, regardless of the method employed, market intelligence for procurement plays many important roles.
About 23 per cent of companies surveyed in the 2018 Level Survey indicated they struggle to find top-quality suppliers. To make matters more complicated, the issue is that 17.5% of the respondents work in a highly regulated industry that requires specific requirements.
The consequences of choosing the incorrect suppliers could be devastating financially. In reality, 30 per cent of respondents reported that their suppliers were not performing and had inconsistent results. With the help of market intelligence for procurement, the issues and concerns can be addressed.
Examine the Spending Data as well as Trends
The study also identifies the immense benefits enjoyed by companies that depend on automated tools to source the analysis of market trends in procurement. For instance, 23 per cent say that payment management functions are included among the crucial or effective tools within these tools.
The ability to precisely and swiftly analyze spending data and trends eases other known issues too. For instance, numerous procurement professionals have said that spending outside the budget and excessive spending are major concerns within their organizations. Recently, we talked about the importance of spending analysis in procurement.
Comprehensive Supplier Analysis as well as Monitoring of Risk
The capability to analyze the current supplier relationships and evaluate risk factors could be improved by acquiring market intelligence for procurement. Our most recent blog post about supplier compliance discusses the importance of monitoring and managing suppliers after considering their capabilities.
Think about the fact that 18% of participants in the survey indicated that risks assessment was by far the most important tool that is available in automated solutions currently, and 31 per cent of respondents said that scoring for suppliers was on the top of the list of important benefits that can be derived from automated tools for sourcing.
While there are methods available to collect and analyze information about the procurement market, many companies across many industries are confronted with common issues that can be addressed with automated procedures. In-depth and accurate information has allowed many businesses to make better decisions about suppliers, both current and new. They've cut costs, lowered risks and reaped other vital advantages. In this regard, procurement specialists might need to examine the methods they use to collect and analyze market data within their respective departments and pinpoint potential areas of improvement.