5 Ways How Market Intelligence Can Boost Procurement and Avoid Glitches
Over the years, the focus of procurement has shifted radically from optimizing direct materials to applying rigor and processes to drive value in specific areas of indirect spend. Leading organizations dealing in procurement tend to optimize 100% of their spend by bringing deep category expertise, and market intelligence across all spend areas in ways that […]
Over the years, the focus of procurement has shifted radically from optimizing direct materials to applying rigor and processes to drive value in specific areas of indirect spend. Leading organizations dealing in procurement tend to optimize 100% of their spend by bringing deep category expertise, and market intelligence across all spend areas in ways that deliver real informational advantage and bring significant value to business stakeholders. To make the best procurement decisions possible without falling behind, companies must ensure that they have access supply market intelligence. In fact, according to a recent research from Hackett’s 2017 Key Issues Study, 42% of procurement executives regarded investing in supply market intelligence capabilities as having a high/very high degree of importance.
Supplier selection process
Several companies tend to spend a considerable amount of time in the supplier selection process. Selecting the right supplier whose activities are aligned with your business goals from the pool of suppliers available in the market is a tricky task for any company. Using the right market intelligence tools, procurement teams can choose the right-fit supplier with ease since a focused-approach with relevant inputs is already in place. In this method, procurement decision makers can gain access to exactly what they are looking for without having to waste time in sorting out irrelevant data.
Curtail maverick spend
Maverick spend refers to unplanned or an uncontrolled spend that tends to increase the overall cost of procurement. One of the main reasons causing the occurrence of such situations is the lack of a central team for sourcing. A market intelligence platforms that provide easy access to vendor details and product/service prices could be put to use by companies, as the information can be shared internally with business stakeholders to avoid maverick orders. Furthermore, the use of market intelligence empowers procurement teams to better negotiate with suppliers for better pricing and save costs through consolidated purchases.
Evaluating supplier performance
While undertaking sourcing functions, assessing the supplier performance is one of the key elements. Moreover, KPIs and benchmarking data are not readily available measuring supplier performance a more onerous task. Using market intelligence, organizations can benchmark their suppliers against industry peers to identify problem areas. Several technology-based solutions can also be used for performance measurement. It helps companies to create as well as track scorecards for an in-depth reporting and analysis of supplier performance. This data coupled with market intelligence can assist in effective supplier performance measurement and management.
Tracking multiple marketplaces
Market intelligence provides sourcing teams with the necessary inputs such as market size, market potential and supplier coverage for businesses looking at market expansion. Each market varies in terms of the demand and supply; market intelligence can help companies to make decisions that suit both their global as well as regional operations.
Procurement operations are often carried under strict time schedules. Due to this, active market intelligence can often get sidelined due to labor and time-intensive effort that is required. Hence, companies can employ dedicated service providers with required expertise and well-trained personnel to perform complex tasks of data-gathering and market analysis. Also, specialists can be hired to track global markets. Procurement companies no longer have to invest their time in gathering intelligence on key markets or the categories they are interested in.