In order to gain access to 100 percent of spend, on a global basis, procurement must demonstrate a deep understanding of the objectives and needs of the business stakeholder, and deep market intelligence that will inspire stakeholders to partner with procurement to attack the indirect spend opportunity.
This paper highlights the key types of market intelligence that your firm needs to acquire in order to maximize savings, as well as a model to evaluate whether to build, buy, partner or consider a hybrid approach to acquire the market intelligence capability you need and deliver maximum value to your firm.
To develop world-class market intelligence, procurement organizations should aspire to develop depth in each of the four major kinds of market intelligence:
Supply Market—Supply market information broadly focuses on understanding the overall make-up of a supply market and the dynamics that drive it. This type of information is important when establishing broader category strategies, embarking upon specific sourcing activities and in ongoing risk and opportunity monitoring.
Supplier Information—Supplier information is an extension of supply market information, focused on a detailed understanding of supplier-specific information like financial health, capabilities, past performance and other important characteristics.
Cost, Price and Commercial—Perhaps the most sought-after kind of market intelligence is that which helps procurement understand supplier costs, margins and how pricing policies differ across different product/service lines, regions and customer classes.
Contract—Pricing and service levels are only part of the equation. Including the right category-specific contract terms and conditions that will help ensure supplier performance and value while mitigating the buying organization’s risk is equally important.
The opportunity for procurement to play a role as a key strategic enabler of the business is present now more than ever. Market intelligence is a critical enabler of world-class procurement organizations. However, developing a leading market intelligence capability is challenging even for the most well-funded and most innovative organizations.
This paper introduces a framework for examining strategies for developing market intelligence capabilities and makes the case that developing a solid foundation in market intelligence can deliver breakthrough business value and elevate the role of procurement in leading organizations by helping them gain access to 100 percent of spend.
Whether firms chose to build this capability with internal resources, partner with third-party providers, or consider a hybrid approach, the market intelligence opportunity is here to be seized.