What is the role of supply market intelligence in procurement?
Supply market intelligence helps make data-driven decisions, use well-informed strategies to meet company targets, and evaluate challenges preemptively to minimize or mitigate the impact. Chief procurement officers face many crucial decisions, targets, and supply chain challenges daily. Supply chains have become increasingly complex, and companies often struggle to ensure they meet all industry standards, comply with regulations, compete with industry leaders, and meet consumers’ demands. With supply market intelligence, companies gain a clearer idea of their market, the factors that impact their competitors’ supply chains, and understand the dynamics influencing suppliers in their market. These insights help create better supplier relationships, establish more valuable contracts, overcome industry risks, increase savings, and stay ahead of competitors. Constantly changing dynamics make it challenging for companies to keep pace with their market, often leading to dissatisfied consumers, various supply chain complexities, wrong business decisions, and ineffective strategies. Leveraging data from supply market intelligence can help companies improve their decision-making process, provide procurement officers with the necessary data to negotiate better contracts, successfully adopt cost-saving efforts, and significantly improve the agility of their supply chain.
What crucial attributes supply market intelligence must have?
Specific: Every industry and market is overflowing with available data and important information. However, when implementing market intelligence to decision-making, it is crucial to ensure the data utilized is specific to the process, market, or strategy being evaluated. Although surrounding data is relevant, companies often fail to realize the importance of specificity and information overload. The presence of irrelevant data can lead to wrong decisions or incorrect targets. Data regarding the food and beverage industry in a certain geographical location about consumer demand for packaged foods would be more relevant to a food retailer than information regarding the need for restaurants or fast-food outlets.
Objective: Data can be highly relevant but significantly biased and often leads to skewed targets or inaccurate decision-making. Ensuring that the supply market intelligence leveraged is objective, without bias towards the partaking organization or a competitor, is necessary for this process to be effective. Partial data can impact how procurement officers approach supplier relationships, understand market dynamics, or evaluate competitors’ strategies. Data can be biased towards a particular geographical region, market, or organization, causing a detrimental influence on companies. For instance, partial data may be biased towards a certain APAC region as the ideal source for food packaging suppliers and manufacturers, potentially influencing procurement officers to enter into long-term contracts with more expensive, low-quality suppliers.
Current: Market dynamics are rarely steady and can fluctuate positively or negatively at any point. While procuring supply market intelligence, companies must ensure their data is relevant to their present time frame and accounts for all current trends, challenges, prices, and other significant factors. Utilizing data from a different time frame can cause companies to miss crucial elements that are currently impacting the market, fail to capitalize on current growth drivers, and suffer losses due to outdated or uninformed risk management strategies. In consumer-centric markets, this is a crucial characteristic when leveraging market intelligence and helps companies stay ahead of the market and their competitors. In the food and beverage industry, failing to identify current trends can lead to significant monetary losses and impact their credibility.
Robust: Data and analytics can be extremely helpful for businesses at every stage and every process. However, companies must ensure their data is relevant, robust, and reliable to utilize supply market intelligence successfully. Major business decisions are made based on accurate and dependable evidence, and failing to ensure the same can create future challenges, increase risks, and cause substantial losses. To make correct decisions, implement strong strategies, and overcome potential industry challenges, robust, evidence-based data is essential. In the food and beverage industry, inaccurate data regarding demand can lead to overproduction or shortages and cause significant losses. Deficiencies can lead to dissatisfied customers, and over-production can cause food wastage, inventory challenges, and monetary losses.
Contextual: While data may be specific to the specific market, target audience, or processes, companies must also make sure that they evaluate the data and contextualize it to their particular business model or end-users. Accepting data at its face value and implementing it as a certain system or organizational structure can cause more damage than benefit and be detrimental to the business. Therefore, when analyzing data, procurement officers and other participating parties must account for context, and apply the relevant data or carefully calculate their approach to the insights or changes suggested by the market intelligence. Consumer demand for packaged food may have increased significantly in recent times. Still, food retailers and fast-food companies must evaluate, assess, and implement this data in contextually appropriate ways for their business model.
Meaningful: When finding and procuring data, employees often fail to organize and present the data appropriately. If the information is poorly presented or fails to state the conclusions, relevance clearly, or insights offered, stakeholders, decision-makers, and procurement officers may misunderstand, fail to understand or make incorrect assumptions. An inaccurate understanding of this data can lead to poor decision-making, detrimental strategies, and significant challenges. Therefore, data need to be presented in a clear and meaningful way. For instance, if showing data regarding the rising consumer demand for ready-to-eat meals and increasing health awareness among target consumers, it must be presented. Companies can fail to incorporate the two trends and develop or launch an unsuccessful initiative.
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Success Story – SpendEdge Advantage
In the food and beverage industry, supply market intelligence has become a necessary step towards improved decision-making, stronger initiatives, and overcoming industry challenges. Recently, a packaged food manufacturer witnessed a significant decline in demand and struggled to identify the factors impacting their sales. SpendEdge collaborated with the manufacturer to assess the changing market dynamics, organizational challenges, and industry developments leading to reduced demand. By procuring and evaluating supply market intelligence, our experts helped the manufacturer identify the significant shift from plastic packaging to sustainable packaging and consumer demand for alternative packaging materials. Additionally, the client found a considerable rise in consumer need for healthy food and other dietary options, such as vegan, lactose-free, or gluten-free food options. With these relevant and crucial insights, the packaged food manufacturer launched two new, successful initiatives and found new suppliers to achieve their re-evaluated targets. The company also regained market share, improved sales, and identified strategies to stay ahead of competitors.