Every industry is connected to another by supply and demand. The product of one industry is the raw material of another. There are also other companies that act as suppliers who sell their products to manufacturers to aid their business.
Most companies have a dedicated team for procurement, whether for raw materials or finished goods; procuring the right amount, and the best quality is of utmost importance. These procurement specialists have a lot of responsibility for it as they must take care of all the above points and think of ways to minimize the cost and ensure speedy delivery.
Procurement market intelligence makes it so much easier for them to perform these tasks. They help ensure regular monitoring and immediate risk and impact assessment for the company and its finances.
The procurement market intelligence tool has become a staple in every purchasing-related sector in the corporate world. There is an increasing demand to make a significant investment in this, to be able to reap benefits and profits by procuring what is necessary.
What is it and Why?
Procurement market intelligence is nothing but a system/tool that gathers data of the desired type, which was earlier done by manual search or google searches or any other labor-intensive task and is automated. For the automation and data accuracy to be attained at its best, the main three aspects that must align for the procurement market intelligence tool to run smoothly are:
- Thorough Market Research: The primary foundation of any application or device to work is to do the groundwork through research. The first step is to have reliable sources of information to collect the type of information required; the next step is to determine what method will be in use to access this information. The last two steps are to store the data and analyze it appropriately. Once all these foundation steps are complete, the following steps will be a cakewalk as compared to this one.
- Competitive Intelligence: This step is crucial as well, as it involves collecting and analyzing several factors that could be a potential leveler of values. These factors could include things like competitive dynamics, disruptors, and much more. The information/data in these specific areas must always predominantly be collected quantitatively.
- Analysis of the Supply Market: Apart from the above two critical aspects, supply market analysis is another crucial aspect as most intelligence depends on it. The specialist has a job to analyze the data collected accurately related to the industry’s supply market. It is essential because the data about the supply market changes and at a quick pace too.
Procurement market intelligence is essential for the following reasons:
- Supplier Identification: As per the Levvel Survey, they found that in 2018, 23% of the businesses approximately that were under survey, have difficulty in finding the right/ideal supplier as per their needs and specifications. They also found that around 17% of them have incredibly high industry-specific operating standards that it needs to fulfill compulsorily.
- One wrong supplier can subsequently put the company under so much loss if the product ordered comes with many defects, and hence the intelligence makes it easier for them.
- Speedy Analysis of the Data and Fluctuating Trends: The same study by Levvel suggested that all the businesses who relied on their trade intelligence have faced significant profits. It was possible mainly because this tool was a game-changer, as it analyzed all the data and trends with a click of a button. It saved them time and effort.
- Credibility Improvement: From studies, 30% – 49% of companies/businesses across the spectrum of industries need formal approval from the department’s management for any requests. The managers need to thoroughly analyze and assess the request before providing clearance for the same. If it has sufficient data, there is a strong possibility for it to get approved, as it gets more credibility.
In short, to summarise the benefits and advantages of this intelligence system over manual methods, the industries that have taken the significant initial investment to set up the system are now reaping benefits from it. It has exponentially increased their profits by helping them save time and money to analyze the vast array of data.
If done manually, it could have cost them a fortune, and it would take ages, and it would also reduce any human errors and risks involved. It can increase the company’s monetary profit since they have reduced all pain points by automating the entire process.