Analyzing the Supply Market

March 22nd, 2007 at 06:57am David Bush - Iasta

Recently Purchasing ran an article which, after noting that strategic sourcing is at the heart of the purchasing function, also noted that analyzing the supplier market, identifying potential suppliers to work with, deciding how you’ll work with them, planning your negotiations strategy, integrating suppliers into your business and monitoring their performance are absolutely critical for successful purchasing and supply chain management.

In this article, they discussed five tips inspired by conversations with top practitioners. These tips were:

• Dive Deeper
• Build a Team Approach
• Quiz Your Peers
• Hold Regular Meetings
• Check the Records

Dive Deeper
According to Deb Lynch, director of sourcing and supply management at Toro Co., the four-quadrant supplier categorization process (leverage, strategic, transactional, and bottleneck) is the best basis for a future sourcing activity.

Build a Team Approach
Jeff Bruett, the automotive division purchasing manager of FCI has learned that the law of supply and demand ultimately determines market costs and prices, and your buying team can’t be a 900-lb gorilla dictating terms and conditions to the supply base. You need to work with your suppliers to get their best efforts, not just their best prices.

Quiz Your Peers
Whether positive or negative, word of mouth really helps in analyzing the supply market according to former category manager at HallMark Inc.. It isn’t difficult to find information on the markets, it’s harder to find good suppliers.

Hold Regular Meetings
The Vice President of Supply Chain Strategy and Planning at Celestica, Harvinder Sembhi, holds regular meetings with its key suppliers every three months to discuss a variety of issues, including pricing trends and supply conditions.

Check the Records
Roy Calderon, the Latin America sourcing manager for H.B. Fuller spends a large part of his day trying to understand the competitive situation and employs a variety of strategies to find out what suppliers are paying for their raw materials to anticipate incoming price changes. In some countries, import records, the most important records, are public information and the best place to start in your quest for pricing information.

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Entry Filed under: General, Interviews, Supply Management Best Practices