Supply Market Intelligence: Benefits and Tips to Gain a Competitive Edge in Procurement
The innovations and trends in supply chain and procurement have been much talked about in the recent times. One such trend in procurement that has turned out to be the new buzz word is the use of ‘cognitive technology.’ This technology consists of a set of self-learning systems that use pattern recognition, data mining, and natural language processing (NLP) to function in the way a human brain works. In fact, cognitive technology is often considered to be a subset of artificial intelligence. The technology is so advanced that it not just repackages data but rather analyzes, compares, finds correlations, and identifies various trends. But in a function like procurement, where technology and digitization are new entrants, companies might often face several challenges while implementing cognitive technology. The following are some of the pain points associated with the digitization of procurement:
- Several procurement teams are still working in a reactive and transactional world without digitized processes to automate transactions
- Limited automation in supplier catalogs
- Currently, most companies use spend information from historical data for decision-making
- The inability of key personnel to focus on stakeholder management, interaction with the user, and negotiations with the supplier due to lack of sufficient insights
Cognitive technology tools to enhance procurement
Here are some of the cognitive technology tools that businesses can leverage to enhance their company’s procurement process:
Supply chain risk insights:
This solution is a tool of cognitive technology that fetches unstructured data from social media and creates alerts ahead of time. This will help category managers to take preventive action to reduce or eliminate the impact of challenges. To establish a cost-effective supply chain, effective demand forecasting and proactive risk management are critical.
This tool combines data obtained through unstructured sources (e.g., social media, news feeds, competitor websites, corporate social platforms, blogs, and forums.) and contrasts that with other data sources to generate insights that were earlier inaccessible. Procurement managers can use this data to identify a new supplier for a category that had not been considered earlier, or even to drop an existing supplier because of the potential risks.
With the help of this tool, companies can save millions of dollars by tracking contract prices in contrast with dynamic market prices, rather than sticking to contract costs that remain constant for a number of years. It allows procurement managers to achieve 3 – 10 % in savings in crucial spend categories over and beyond what has already been saved.
Cognitive buying assistant:
This cognitive tool promotes a superior user experience by applying cognitive tools to a mobile app. It recommends the most relevant items to buy based on user profile, usage patterns, as well as sentiment analysis that is gained out of feedback from other users. It means that ordering items in the professional capacity will soon be as easy as ordering products for personal use. The tool is a critical driver of user adoption as an enhanced buying experience will result in better compliance and better savings for the user as well as the business.
To know more about the use of cognitive technology in procurement
Over the years, the growth of the global textile industry is mainly dependent on the continuing major investment in innovation and invention. However, the rising demand for superior product and service offerings at a cost-effective price are one of the critical challenges faced by the manufacturers of olefin fabric across the textile industry. As a result, players operating in the olefin fabric manufacturing space are leverage the use of procurement best practices solutions to gain a comprehensive understanding of their sourcing and procurement activities to improve their overall profitability and formulate better negotiation strategies with the suppliers.
With years of expertise in providing a wide array of procurement best practices solutions, SpendEdge aids olefin fabric manufacturers to implement best-in-class sourcing and procurement strategies and consequently gain a competitive edge over the peers operating in the industry space.
The Procurement Pain Point and Insights Offered
A renowned olefin fabric manufacturing client was facing predicaments in assessing their sourcing and procurement best practices against their peers. Additionally, the client was facing difficulties in identifying the key suppliers operating in the olefin fabric manufacturing space.
SpendEdge’s procurement best practices experts personalized a blended research methodology, which involved primary and secondary research coupled with qualitative and quantitative data collection methodologies to cater to the business requirements of the client.
The procurement best practices engagement helped the olefin fabric manufacturing client identify the sourcing and procurement best practices adopted the peers in the industry space. Additionally, the client was provided with a list of suppliers operating in the manufacturing space. This helped them select the best supplier.
Fundamental questions answered in this procurement best practices study include
The olefin fabric manufacturing client was able to adopt best-in-class sourcing and procurement strategies across the supply chain. This helped them reduce their sourcing spends and reduce maverick spends across the supply chain.
To know more about our procurement best practices solutions for an olefin fabric manufacturer
The procurement and travel departments have adopted an integrated approach and are directing their efforts towards strategic, efficient, and cost-effective corporate travel management programs.
The need to bring together disparate teams, stakeholders, and customers is a result of the globalization wave that transcends geographical boundaries; thereby, giving impetus to corporate travel management. The sky-rocketing travel costs have made it inevitable for companies to develop highly effective, customizable, and profitable travel program solutions for the buyers. The constant need to achieve cost efficiency and adopt a strategic decision-making approach has eliminated the silo-based approach within the organizations. As a result, businesses have started consolidating their travel programs with a single travel management company (TMC), which not only ensures higher ROI but also enhances the organization’s overall travel program.
Things To Keep In Mind for Procurement And Travel Departments
In any organization, the procurement and travel department must give priority to travellers’ safety and booking habits, while complying with the company’s policies and framework. The procurement department and category managers must understand the difference between procuring materials from a supplier and procuring travel management services from a TMC. Big data and analytics give the travel managers access to more information related to travellers’ booking behavior, etc. New technology platforms such as blockchain allows organizations to adopt centralized payment solutions; thereby, reducing the processing time and increasing process efficiencies.
Conducted by SpendEdge’s sourcing experts, this webinar will deal with the following key considerations –
- Analyzing the current scenario of collaboration between the procurement and travel department in a typical organization
- Studying the changing engagement models in the industry
- Assessing the use of big data and analytics as a key influencer of the corporate travel management market
- Exploring the role of blockchain technology as a distribution platform for corporate travel management
- How the supplier landscape is consolidating to provide unified travel management and expense services?
Fourth-party logistics, or 4PL, is gaining popularity due to the growing demand for suppliers who can handle logistics, as well as manage their supply chain. The 4PL service providers not only procure, store, and distribute supplies, but also handle its internal processes. By acting as an integrator, the service providers optimize the supply chain costs, provides better visibility on the various supply chain processes, and boost the overall productivity of the business. Usually, category managers consider factors like industry-specific expertise, the level of technology employed, as well as supply chain integration capabilities while choosing a 4PL service provider.
The foundation of a seamless supply chain planning
The five key aspects which form the foundation of a smooth supply chain planning are:
- Latest IT infrastructure
- Better strategy for planning and execution of logistics
- Industry-specific expertise
- Enhanced integration of supply chain capabilities
- Scope for customization
Post globalization, the length and complexity of supply chains have grown manifold. Buyers prefer service providers who not only track and report on the flow of goods and services but also capture real-time data with minimal disruptions in the network. All this is possible only if the suppliers have updated their infrastructure with the latest developments in the IT industry. The advanced technology used by 4PL service providers not only makes the entire flow of the supply chain seamless but also makes it easier for suppliers to connect across global networks and provides better management of information and improved reporting & end-to-end tracking.
Every logistics activity involves huge scale of coordination between distributors, manufacturers, and suppliers as well as the backward integration of information flow from customers to suppliers. Usually, supply chain managers face problems in decoding a large amount of information to coordinate logistics across geographies. 4PL companies enhance the functioning of the entire supply chain by overseeing distribution and warehousing functions as well as identification of best transport solutions.
SpendEdge’s take on the growing popularity of 4PL services
Outsourcing of logistics services has become quite common today. Buyers are looking for simple and cost-effective solutions for their businesses. Most 4PL service providers offer comprehensive portfolios, which smoothen the functioning of the entire supply chain and reduce the overall operational costs. At present, the automotive sector in the EMEA region as well as in the Americas is witnessing a high demand for 4PL services.
For detailed information on role of 4PL services in supply chain enhancement Get in Touch
The recent procurement market intelligence study by SpendEdge on media buying and planning helps companies in the FMCG industry to assess the supply market landscape and shortlists media agencies that have strong capabilities and the best prices for its substantial media budget.
Trends in the media buying market
Media buying and planning primarily deals with negotiating, strategizing, and evaluating procuring time of advertising spaces on several media channels such as radios, televisions, newspapers, magazines, and the Internet. An effective media buying strategy will help companies to reach the target audience most economically and efficiently that results in maximized ROI. The increasing media spend on digital platforms, and the introduction of programmatic buying and real-time bidding platforms is fueling the demand for these services in the market. The development of new businesses and start-ups in the emerging nations of India, China, and Mexico is boosting spending on ads and content in the region. Service providers are focusing on expanding their businesses in these regions to increase their revenues and profitability. SpendEdge’s procurement intelligence study on media buying provides a detailed understanding of the supplier engagement models, suppliers’ evaluation, and selection criteria, and cost breakup and positioning for companies in the FMCG sector. This study also offers a complete overview of the sourcing and procurement best practices, current market trends, and pricing models.
The increasing focus using correct content and marketing it efficiently is the new emerging trend in the digital media space. Companies are leveraging the quality of the content to build brand value amongst the external and internal stakeholders. Furthermore, creating and distributing valuable and relevant information on online media platforms will help enterprises attract and acquire more customers. Developing effective content marketing strategies will help companies analyze the consumer buying patterns through their social media interactions.
Programmatic buying to automate media marketing
Programmatic buying allows companies to target a specific group of people and demographics thereby, optimizing and automating the media buying process. By adopting these solutions, companies ensure efficiency in transactions as it cuts down complex tasks in the media buying process and results in cost-effectiveness by eliminating the middlemen. Programmatic buying helps enterprises buy advertisement slots on a real-time basis and significantly reduces the costs associated with digital media planning and procurement.
Adoption of social media analytics
The leading FMCG companies are implementing social media analytics tools to identify their target audience and select the most effective media placement for advertisements and marketing campaigns. The increasing use of social media platforms such as LinkedIn, Facebook, YouTube, and Instagram is encouraging companies to develop effective marketing strategies for these platforms and boost the requirement for media buying services. This analytics identify the behavioral patterns of the target audience and understand which platforms will help achieve desired visibility objectives.
Solutions SpendEdge offer to businesses
The recent procurement intelligence study by SpendEdge on media buying provides an overview of the key suppliers operating in the market, latest trends in procurement, and the service level agreement terms. The solutions offered are listed below:
- Offer a better understanding of the supply market, which helps identify the key media buying and planning service providers
- Design effective strategies on cost structure, price negotiation, sourcing and procurement best practices, and supplier engagement models
- Provide information on cost-saving opportunities, pricing models, price negotiation strategies, service level agreement terms, and contract terms and conditions
- Deliver comprehensive insights on supplier engagement models, suppliers’ evaluation and selection criteria, and cost breakup and positioning
- Analyze the supply market landscape and shortlist media agencies
Read our complete case study titled – Procurement Market Intelligence Solution Helps a Leading FMCG Company
Other case studies you might be interested in:
- Procurement Market Intelligence Solutions Helps a Global Telecom Company
- Cost Modeling Helps a Leading Molten Salt Tank Manufacturer Identify Potential Cost Saving Opportunities
- Supply Market Intelligence Solutions Help a Leading Food and Beverage Company
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According to top management professionals, cost modeling is the numero uno purchasing best practice. Cost modeling enables purchase managers to determine the actual cost of manufacturing a product and understand the underlying cost components and cost drivers. By leveraging cost modeling, the procurement and purchase managers gain the upper hand in devising negotiation strategies and helps them to identify understand the costs involved from a supplier’s perspective. Bottom line of the story: cost modeling helps procurement professionals to boost their negotiation skills, thereby driving profitability for the business.
Cost modeling is the analysis of the costs involved in manufacturing a product or service and determining its optimum cost of production so as to earn a fixed profit margin. It takes into consideration material costs, production costs, labor costs, research and development costs, sales and administrative expenses and profit margin so as to arrive at the actual cost. Cost modeling tool enables the buyer to fathom what exactly goes into manufacturing a product, understanding suppliers pricing strategy and drive cost savings opportunities for the organization. It also facilitates collaboration between the supplier as well as the buyer which not only helps them in optimizing costs but also enables material design improvements and provides supplier insights. But how can cost modeling boost managements negotiation skills enhance negotiation strategies, you ask? Here’s how.
“You Get What You Ask for” – Cost Modeling
Top procurement managers have ranked negotiation skills as one of the important skills a procurement professional must possess. It is an essential trait that enables the buyer to negotiate or bargain the prices of supplies and materials with the suppliers. Negotiation is a process to find a common ground between two or more parties i.e. buyers and suppliers, in order to reach an agreement or achieve a settlement on common grounds that is beneficial to all the parties involved. An effective cost modeling tool enables organizations to comprehend the supplier’s pricing strategy and identify the factors that drive final product pricing such as raw materials, labor, production process, logistics and much more.
Cost modeling helps buyers to seal the deal with the suppliers at the best possible price and squeeze profit margins. This helps them to negotiate the supplier’s terms and conditions and challenge his cost model. Often, the suppliers are compelled to back up the material prices with real cost data which helps the procurement professionals to understand the true manufacturing costs of the product. It enhances negotiation skills and thereby creating opportunities to drive cost savings and profitability. It helps in spend management, identifying each cost component of the product and determining the most expensive components or parts that demand management’s attention.
At SpendEdge, we offer cost modeling and procurement intelligence solutions to organization that help them in reducing costs, drive profitability and create a sustainable competitive advantage based on actionable insights.
To know more about cost modeling, negotiation strategies, business negotiation, predictive modeling and its benefits for your organization
The global office supplies market in experiencing slow growth and is expected to undergo significant changes in its current market structure. As online sales channels are growing at a rapid pace, brick-and-mortar retailers are planning to reduce the number of retail stores and increase their online presence to compete with online channels. The supply market is going through a market shift, wherein suppliers are using sustainable raw materials that have a low carbon footprint and are recycled or re-manufactured from post-consumer products.
The Procurement Pain Point
One of the leading companies in the global office supplies market was losing the supplier base to its competitors due to rapid market expansion. Moreover, rising environmental concerns have impelled organizations to source eco-friendly and biodegradable products, which, in turn, is putting pressure on suppliers to adopt sustainability practices. Despite being one of the top players in the industry, the company lacked analytical tools and techniques to perform a detailed supplier landscape assessment, develop pricing engagement models, and introduce strategic sustainability practices. The client approached SpendEdge, knowing that we have an extensive experience in analyzing the supplier market landscape, to provide strategic and actionable insights.
Procurement Insights Offered and Outcomes
Our supplier market intelligence experts followed a blended research methodology comprising of primary and secondary research. We gathered information about some of the important market influencers in the office supply sector including macroeconomic and microeconomic factors, latest trends, key growth drivers, challenges, and major regulatory framework. Our analysis comprised of supplier insights including the operational and functional capabilities of suppliers, supplier evaluation and selection criteria, and supplier positioning.
This supplier market intelligence study helped the client gain a complete understanding of the market landscape in terms of pricing models, supplier intelligence, and category essentials by identifying the areas of improvement. Our team developed a set of actionable insights that allowed our clients to cover areas of category spends, demand-supply shifts, cost-saving opportunities, category risk analysis, and category growth drivers. Furthermore, it was followed by an in-depth analysis of the top suppliers, covering unique capabilities from cost-breakup techniques to procurement competencies. In just four weeks, this supplier market intelligence study offered the client a complete, scalable solution on the supplier market landscape and pricing models. Moreover, the study also provided insights into cost-saving opportunities and supplier engagement models.
This procurement market intelligence study offered the client a complete, scalable solution on the supplier market landscape and pricing models including category spend analysis, demand-supply shifts, and strategic sustainability practices.
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Managing cash flow is an essential part of running a business. It is easy to focus on revenues and expenses, and neglect to monitor when and how cash enters and leaves the company’s accounts, but doing so can put the company in danger, or at least leave money on the table.
It is also easy to think of cash flow as purely the domain of the finance department, but it is an area that procurement can have a significant impact on. There are several things that procurement can do to improve cash flow, and likewise, several actions that can negatively affect cash flow. Here are some ways that procurement can monitor and improve an organization’s efficient use of cash.
Good software programs and attention to detail are invaluable to inventory management, and optimal stock levels make for better cash flow. By carefully monitoring inventory and taking advantage of data analysis and prediction, it is possible to minimize excesses and shortfalls. This means less money tied up in inventory, as well as less danger of losing sales due to running out of stock.
Using analytics in decision making
Tracking procurement data such as order quantities, prices, and payment terms can reveal options that might otherwise be overlooked, such as the optimal time to make an order or the best vendors to buy from. Analytics can help point out ways to consolidate orders or vendors to improve rates. It can also compare real-time spending to the company’s budget. Not only does this provide quick, valuable feedback on how current performance compares to planned spending, it also makes it easy to adjust spending as necessary, to account for a shortfall or take advantage of higher total cash than expected.
Maximizing value from payment terms
There are several ways to take advantage of payment terms and to negotiate them to provide better value. If the supplier offers a discount for paying within a certain timeframe, it is advisable to pay the invoice early. If the supplier does not, however, it is best to wait until the end of the invoice term and hold onto the cash.
It is also sometimes possible to negotiate more favorable terms with suppliers, either for a discount for early payment or longer payment terms. However, longer terms may strain relationships with suppliers, so this should be considered carefully and not overused. It could lead to higher prices (to compensate for the longer wait for payment), or even to a company no longer wanting to do business.
These are just a few of the ways that procurement can make an impact on cash flow. Effective inventory management and strong supplier relations can contribute significantly to an organization’s success. Solid procurement intelligence solutions and comprehensive analytics can identify many ways to save money and optimize cash flow and are an important part of a successful business.