Is Supply Market Intelligence Relevant in Procurement: All You Need to Know
Procurement is slowly gaining traction and increased strategic importance within companies. This has raised the bar of expectation from procurement professionals to do much more within a limited time frame. This is where the role of supply market intelligence comes into the picture. To make the best decisions possible without falling behind, procurement professionals must […]
Procurement is slowly gaining traction and increased strategic importance within companies. This has raised the bar of expectation from procurement professionals to do much more within a limited time frame. This is where the role of supply market intelligence comes into the picture. To make the best decisions possible without falling behind, procurement professionals must ensure that they have access to and effectively use supply market intelligence. But before we get into further details of how supply market intelligence is relevant in procurement, let’s get into some basics:
What is supply market intelligence?
Market intelligence consists of three pillars. The first is market research, which principally involves data — how to get it, provide access to it, store and analyze it, and the many methods and applications for doing so. The second pillar is competitive intelligence, which consists of obtaining information such as competitive dynamics, disruptors and other value levers at play for strategic purposes. Lastly, the third key pillar is the process of gathering and analyzing data and information relevant to a company’s supply markets. All three ultimately support the goal of enabling accurate and confident decision-making in the procurement process. Therefore, from a procurement perspective, market intelligence is often referred to as supply market intelligence (SMI).
Importance of supply market intelligence to organizations
Collecting large amounts of data such as the cost, price, additional benchmarks, KPIs, best-fit suppliers, and negotiation levers, among others — to inform a sourcing process is a difficult task. But factors such as the rapidly increasing number of sources and a limited amount of time and resources (shrinking teams, shared services approaches) for organizations to deal with just makes things even more difficult. This is the reason most organizations are pushed into seeking out market intelligence. Market intelligence is necessary to help tackle any aspect of most of these challenges. An organization will be able to alleviate a considerable amount of its business challenges by gathering data on supply market capabilities, getting a good read on how the competition is developing, managing their supply base and supply chain, and understanding key trends driving or otherwise affecting the market — ultimately utilizing these for strategic purposes. By leveraging external signals and data to refine and enhance product plans internally, identify competitive opportunities, and map the execution of better sourcing strategies to support overall business requirements, businesses can leverage buying power and compete effectively.
How relevant is supply market intelligence?
Several procurement practitioners and their organizations are making conscious investment efforts in supply market intelligence planning and capabilities — especially with help from third parties. As more number of players are slowly recognizing the importance of supply market intelligence, they are dedicating an increased number of workforce to build on this capability. Today, improving analytical, procurement, modeling, and reporting capabilities to support market intelligence initiatives has become a higher priority than capabilities that had previously been emphasized. Ultimately, the degree to which market intelligence is built upon data and analysis, enabled by various parts of the organization, and deployed for different purpose-driven ends ultimately speaks about how relevant it is, and will continue to be, for procurement teams.
To know more about how supply market intelligence can help enhance procurement in organizations