Learn How Buyers Use Market Intelligence

Market intelligence is gathering and analyzing information related to a company’s supply market and support in making a strong and accurate decision during the procurement process. The market intelligence is mainly based on three key factors.

First is market research, which basically includes how to get data, how to store and analyze it, how to access it, and the methods and applications to do so.

The second factor is Competitive intelligence. This includes gathering information related to dynamics, disruptors, and other levers to decide on a strategy.

The third key pillar is the process of gathering and analyzing information related to the supply markets of the company.

All these three factors strongly help the business in making a decision regarding the procurement process. This is why often procurement market intelligence is referred to as supply market intelligence(SMI) from a procurement point of view.

How supply market intelligence is relevant?

In general, companies must consider utilizing market intelligence to achieve their goals. But in reality, procurement practitioners and companies are investing in third parties for supply market intelligence planning and capabilities.

Around 65% of the companies are found to be using some form of external resource for SMI, according to a study published in a supply chain management review. Some companies are even found to be using multiple parties for supply market intelligence.

In the latest research, 42% of the procurement executives view SMI as the top strategic activity in the procurement process. Also made SMI the number one activity that is being evaluated and piloted within their organization.

On a bigger note, how the procurement market intelligence is built upon data and analysis from several parts of the organization and supports the decision making of the company shows how significant is this, and that it will continue to be so.

Characteristic of a valuable market intelligence

For market intelligence to be truly valuable, it should possess the following characteristics.

Specific

Intelligence should be able to answer all specific questions.

Objective

Independent intelligence that is not based on a specific organization or geography will provide a business with more reliable and effective decision making rather than decisions made with biased and inaccurate intelligence.

Current

It should be based on current market conditions. intelligence based on last month’s or last year’s information can cause the organization to make a poor decision and even damage the procurement’s credibility.

Robust

The budget estimate provided by a single supplier wouldn’t be enough to make a robust decision. While making a decision, the manager should be having at least three data sources to triangulate each data point with two other sources to create an effective plus accurate picture.

Also, it is important to include every data point such as production cost, logistics cost for each territory.

Contextual

Intelligence must be contextualized to the business with analysis which leads to useful and actionable insights and not just more noise. This can be ensured by filtering only relevant and reliable information from multiple data sources.

This would help the category manager to make an effective decision that helps in achieving the goals with excellent risk management.

Meaningful

Procurement professionals should be presenting the intelligence in a compelling and attractive way that makes it easy for everyone to understand immediately. If intelligence is presented in a poor way such as in multiple spreadsheets, it will be difficult for stakeholders to understand and derive any decision.

Ways to source market intelligence

While sourcing market intelligence, category managers have options to look for, such as:

Desk Research

Desk research is done on freely available resources on the internet such as publications, reports, and supplier websites. This gives answers to some of the simple and basic questions.

It costs nothing apart from the time spent on the research, but the data will not be aligned and specific to the questions you have, since it is general and available to everyone.

Category managers who rely solely on desk research are more likely to make poor decisions. But it is always a better starting point.

Information from suppliers

Information from suppliers and internal stakeholders will be more useful since this information will be more specific to individual products, categories, countries, and factors that affect the supply chain.

Internal Intelligence team

It is always recommended to establish an internal intelligence team for the business. It delivers data and information on any specific queries to the business, which helps in making a well informed and efficient decision. But it takes a major investment.

It is important to note that procurement intelligence is not only about saving costs. The four important aspects in which it could be useful is to Increase market share, to mitigate against risk, to improve competitive positioning, and to bring about greater innovation to the business.