Procurement market intelligence is the process of collecting, comparing and analyzing supply market data in order to make the best purchasing decisions. Is a necessary step for cutting costs, making informed decisions and being aware of the current market. And although it’s a lengthy process that might require hiring new personnel or adjusting to new software, it’s a highly beneficial one.
Gathering insight about the market usually requires the following stages:
- Supplier research. Collecting information about the suppliers and finding out the basics like their reputation, reliability and trustworthiness is the first step.
- Market analysis. This involves learning about the market trends, assessing current and potential growth, and studying competition.
- Price research. Here, one would compare the suppliers, find the best deals, as well as learn about the composition of the price.
- Risk assessment. Learning about the risks and factors that they may be associated with is an essential step to market intelligence.
Benefits of Employing Procurement Intelligence
Finding the right vendors is the cornerstone of your business’ success. Procurement intelligence is just that - it’s research into who you should choose to do business with and why. Let’s look at some of the benefits that procurement intelligence brings.
Saving money
Cost savings is what all the businesses are after in these volatile times. Gathering supply market intelligence can help you compare prices, see what the price is composed of, and in turn, tweak these factors. Understanding the market will also allow you to negotiate better deals for your business. Seeing what other people spend their money on will give you a better idea of future trends.
Choosing the best supplier
Working with reliable suppliers is half your success, but to choose the best one, you need to know who operates the market. Researching suppliers, understanding what they offer and why they charge what they charge will give you the upper hand when operating your business.
Mitigating risks
Understanding the market situation will give you more information about why the price fluctuates, why a certain supplier has gone out of business, and so on. This information will allow you to predict those changes and tweak your business model before anything happens. If a vendor goes bankrupt, you will be ready and will already have found another one to replace them.
Making more informed decisions
Supply market intelligence for procurement professionals gives them the upper hand when it comes to decision making. Being informed of the risks, potential disruptions and prices on the market will help you make better decisions for your business, both in the short and long run. When data is backed up by solid research, it is more credible and it makes the manager’s job easier.
Procurement Intelligence Technology
Proper tech tools and software are extremely useful when it comes to implementing a new approach to work. In terms of procurement intelligence, doing it all manually is a waste of time, not to mention the lack of accuracy. Employing a proper software can do half the work for you, save you time, and money.
Data analytics and business intelligence
Proper data analytics & BI software can help you visualize data in an interactive, easy-to-understand way. It pools data from different resources, which gives you enough information to make an informed decision. Apart from that, DA and BI software can be operated without relying on an IT or analytics team, which means that you will be able to identify trends and perform research yourself.
Such software does come with some challenges that you should be aware of when choosing which app to use:
- Data errors
- Scalability issues
- User training
- Potential security breaches
Market intelligence platforms
Using aggregator platforms can help you gather intelligence without hiring any new employees. These platforms usually collect real-time information from news, social media, and industry professionals, including your potential competitors. Keeping an eye on this data will ensure that you are aware of all the trends and the overall market landscape. Outsourcing this task to a specialized service is also an option. However, here are some platforms that can help you avoid hiring third parties:
- MarketLine
- Factiva
- Crunchbase
- Euromonitor International
- CB Insights
Artificial intelligence and machine learning technologies
Employing AI and ML algorithms can be useful in automation, analysis and processing large volumes of data. AI-powered software can be used for practically anything, from supplier selection, to risk assessment. Its ability to handle large amounts of data can also benefit you in forecasting demand. This technology will come in handy when analyzing historical price data, supply & demand, and market conditions.
Even though AI and ML can be extremely useful, this technology can have its drawbacks as well. Since it’s made and trained by humans, it can adopt bias from those humans. Overreliance on technology is another big issue, along with privacy and security.
EProcurement systems
Online platforms for eprocurement can help businesses automate and digitize processes that are normally done on paper and via emails. They can be beneficial in standardizing processes and saving costs associated with the procurement process. Instead of having employees manually go through suppliers’ info, eprocurement platforms collect all the data and help streamline workflow. Software like Tradogram can help you automate and simplify the purchasing, requisition and negotiation processes.
Cloud-based solutions
Storing all your data on the cloud will facilitate instant access to information and easier sharing. This, in turn, facilitates workflow, making it faster and more efficient. Storing data on the cloud can give you more space and processing capabilities that an ordinary computer would, besides it’s easy to scale up or down without much additional investment.
Cloud-based app developers usually invest a lot into security and privacy of their data, so there’s no need to worry about potential hacks. These solutions also roll out regular updates, improving user experience and adding new functionality upon need.
How to Implement Procurement Intelligence
Implementing procurement intelligence may feel like a rapid change for your employees, however, like with every change, it will be worth it in the long run. Automating the intelligence process comes in four steps.
- Identifying data sources
- Analyzing & interpreting the data
- Reporting
- Implementing findings
Now, let’s break down this process and see how you can implement procurement intelligence into your operation easily and seamlessly.
Identifying data sources
When collecting data, it’s vital to not rely on a single source of information. Your team can use the tools and resources mentioned above to access all the vendors’ data. This gives you the upper hand when negotiating and determining your conditions. Otherwise, you risk jumping to subjective, biased conclusions that do not reflect the overall market.
Another crucial step is looking at procurement records, purchase orders and contracts. This will allow you to identify your company’s spending patterns and supplier performance. Then, you can contact suppliers for relevant information like updated pricing, delivery terms, etc.
Data analysis
If you use data analysis software like eprocurement systems or AI, you can skip this step. But if you don’t prior to analyzing data, you’ll need to standardize it, rectify mistakes, remove duplicates and prepare it for proper analysis.
After that, you can apply techniques like predictive, descriptive and prescriptive analytics to find patterns, correlations and trends in the data. This data will also give you insight as to risk factors, and allow you to see opportunities and potential challenges.
Interpret the data based on your company’s goals, opportunities, limitations, and priorities. It later can be used for strategic planning and improved decision making.
Intelligence reporting
The collected and analyzed data now has to be presented to the team and appropriate stakeholders. For the data to be easy to comprehend, you need to structure it, providing your methodology and findings. The key findings, metrics and KPIs will benefit from visualization.
For maximum efficiency in reporting, it has to be tailored. Executives, procurement managers, and other stakeholders will need different reports tailored to their needs and responsibilities. Update the reports every once in a while to make sure they are relevant and accurate.
Findings implementation
Develop an action plan and a strategy to best implement the findings. Establish proper communication channels between the appropriate departments - finance, operations, procurement, and data analytics. That will allow you to prioritize tasks according to their urgency, relevance and potential impact. Regularly review the outcomes of your work to make the necessary adjustments in a timely manner. Then, your procurement efforts will be successful and lead to better deals, higher income and sustainable growth.
Conclusion
Implementing procurement market intelligence will give your business immense benefits, such as cost savings, more accuracy in decision making, and fewer risks. Even though switching to a new way of doing business is challenging, by using our tips and applying the aforementioned technology, you can take your business on a new level. With proper research and data analysis, you can grow your company in a sustainable way.
.png)
.webp)
