In the latest Denali newsletter, the topic of market intelligence is analyzed. In it, they show the background of different types of corporate intelligence – market, business, competitive. However, none of these address intelligence from the sourcing perspective.
Since I cannot link directly to the newsletter, I will copy some of the definitions that Denali proposes for the components of sourcing intelligence.
Supply Base Insights
* Top suppliers – domestic and/or global
* Market share analysis
* Supply market trends – merger and acquisition activities, etc.
* Supply base structure – local, regional, or global
Supply & Demand Analysis
* Supply & demand trends and forecasts
* Capacity issue identification
Market Forces Analysis
* Analysis of various market forces, e.g. Porter’s Five Forces Analysis
* Understanding of supplier vs. buyer power
Cost Driver Analysis
* Identification of key cost drivers for specific spend categories
* Pricing trends and forecasts for key cost drivers
Category Pricing Trends & Forecasts
* Historical pricing trends for the category as a whole
* Price forecasts for the category, based on cost driver analysis, combined with supply & demand analysis
* Short- and long-term outlooks
Supply Risk Outlook
* Identification of potential supply risks for the spend category
* Outlook – will these risks improve or get worse?
Category Trends
* New products, services, specifications, or technologies
* Potential product substitutions
* Potential regulatory changes
* Key challenges facing the industry and how they are being addressed
Global Competitive Sourcing Aspects
* Low-cost countries from which the category can be sourced
* Logistics and other total cost of ownership considerations
* Country risk and outlook
Insights & Best Practices
* How other companies are sourcing this category
* Specific approaches that are working well
* Innovations relative to the category
* Specific metrics relative to the category that can be used as benchmarks
* Examples of savings opportunities
Most importantly, Denali claims that good sourcing intelligence can bring 3-5% savings and better visibility into risk. I know from an eSourcing perspective, companies are always looking for quick ways to supplier discovery/identification. There are many ways to become best in class and the results are tangible and very clear.
