This series includes articles dedicated to Procurement Skills of a Sourcing Hero, Data Challenges, Innovation, Looking Beyond Cost, Maverick Spend, Supplier KPIs, Supply Chain Disruption and Transparency.

Trying to successfully manage several categories without adequate market intelligence is like attempting to drive a car with your eyes closed. It’s possible that you’ll get from point A to point B without an accident, but it’s more likely that you’ll cause a great deal of damage along the way.

Without market intelligence, Sourcing Heroes will be at a severe disadvantage when conducting negotiations, managing risks, and making quality decisions. Gathering market intelligence involves several challenges that can trip up even the most experienced procurement professional. 

How is market intelligence gathered? 

Desktop research

This is by far the most popular method of gathering market intelligence, especially when only one or two people are looking after categories. There’s an enormous amount of free information out there such as supplier websites, annual reports, trade publications, and analyst reports. Market research companies often publish free summaries or overviews, with deeper insights available for a price.

Unfortunately, there’s no competitive advantage to be gained through desktop research because a category manager in a competing company could be looking at the very same information. Finding an answer to a specific question could also be hit-and-miss. Desktop research should therefore be seen as a starting point for gathering market intelligence.

Sourcing intelligence from suppliers

Suppliers do not only provide goods and services; they’re also one of your richest sources of market intelligence. They live and breathe in the category space, and draw information from their own networks of suppliers and customers. It’s therefore likely that the first place you’ll hear of an anticipated disruption to the supply chain will be from suppliers with their ears to the ground.

One of the advantages of this source of intelligence is that your organization will have a unique supplier ecosystem and could potentially access information your competitors do not have. Unlike desktop research, suppliers can be helpful in answering a specific question about your category.

Keep in mind that a supplier’s information may be biased (such as exaggerating the demand for their product). Source information from multiple suppliers rather than a trusted few, and check against other sources of intelligence.

Market research teams (internal)

Some of the largest organizations have the luxury of internal intelligence teams consisting of data scientists that can find the answer to specific questions for category managers.

Artificial Intelligence (AI)

Cognitive procurement AI such as IBM Watson can do the job of a desktop researcher, but exponentially faster and more thoroughly. AI can scan thousands of sources ranging from analysts’ reports to social media in an instant, and can be trained to raise red flags when it recognizes the likelihood of a disruptive event taking place, or can alert users to the best time to purchase a product. It’s no wonder cognitive procurement AI is often marketed as being akin to seeing into the future.

Not all intelligence is created equal

One of the key skills a Sourcing Hero must develop is the ability to discern the quality and veracity of market intelligence. Better-quality data equals higher-quality decision making. Data should be:

  • Up-to-date: This is more critical in some categories (such as oil) where the market is in a continual state of change, but as a rule, all market intelligence should be as up-to-date as possible.
  • Unbiased: Check your biases, along with those of the people supplying you with category intelligence. Is the information biased towards a particular supplier? Are you making assumptions about quality and price based on geography? Be careful to avoid confirmation bias, which involves searching for information to confirm a belief or hypothesis you have already formed.
  • Reliable: Ensure your intelligence is robust by drawing it from multiple sources. This means asking several suppliers – not just two or three – for their costs, and being disciplined enough to double-check information to increase the accuracy of your category intelligence.
  • Actionable: What is the organization supposed to do with the data you have gathered? The Sourcing Hero's job is to present the data in a way that will lead to actionable insights, and develop guidelines and recommendations for the business rather than simply collecting data points.

Don’t have time to source market intelligence?  

For small procurement teams (which can sometimes be only one person), the only viable option for gathering category intelligence is to outsource the task to a third-party service provider. This can involve subscribing to a syndicated intelligence provider (for broad reports), or a custom intelligence provider that can find the answer to specific questions on your behalf. Cognitive procurement AI providers may also act as a custom intelligence service.

Another option is to outsource your management of a category – including market intelligence research – to a group purchasing organization. A GPO can save you weeks of effort by leveraging its own intelligence sources to gather all the data needed to make an educated decision on the best suppliers. GPOs like Una do all the heavy lifting, which means all you have to do is start saving with the confidence that your GPO’s suppliers have been chosen based on best-practice market research.

Save yourself a headache when it comes to category intelligence. Get in touch with Una today!

Read more from The Sourcing Hero's Field Guide to Procurement:

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innovation costreduction mavspendKPIs supplychain transparency-1


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