Procurement market research is the process of in-depth study and analysis that entails defining the specific need and determining the most appropriate acquisition method for procurement.
The term ‘procurement’ though often used arbitrarily with ‘purchase’ is an entirely different and systematic process that includes sourcing and purchasing goods and services from an external source, like a third-party vendor or supplier as opposed to direct purchase. In that regard, procurement market intelligence acts as a suitable precursor to purchasing.
The procurement department is in charge of purchasing products and services for a business, shopping for supplies at fair rates, managing all legal processes involved with securing a contract, budgeting expenses for the goods, and analyzing financial patterns to ensure that company funds are invested wisely.
Hence, a procurement manager by and large deals with things like sourcing activities and tactical sourcing, negotiation and vendor management, strategically selecting goods and services, approving organizational purchase requests, and receiving goods and services.
Although a manual data-gathering approach may not be successful or feasible in many business environments today, given the many detailed moving parts in procurement analysis that each requires sufficient attention.
Regardless of the system, procurement market intelligence plays a critical role in a variety of ways. To begin with, procurement market research will help enhance the ability to evaluate current supplier relationships and determine risk factors.
This analysis-induced predictive model when supported by technology can be used to combine spend data with intelligence data to arrive at a suitable solution that adds value to the company by allowing it to make more educated and meaningful decisions.
For example, if the price of raw material, say cement, has dropped below the limit specified in the supplier contract, companies may request the next stock at a lower price. As a result, the cost of the commodity is reduced.
One of the major challenges for any business is to find or source quality suppliers. The effects of engaging the wrong suppliers can be financially draining. Through excellent procurement market intelligence, this issue may be minimized.
Although manual methods for collecting and analyzing procurement market data are available, the reality is that many companies across a broad variety of industries face common pain points that could be solved by automated processes.
Many businesses have benefited from accurate and timely intelligence in making better decisions about new and existing suppliers. They were able to save money, minimize risk, and gain other important advantages.
With this in mind, procurement professionals may need to examine how they collect and evaluate market data in their departments, as well as identify areas where they can develop. In general, a company’s procurement department undertakes six different procurement processes.
These may have different names depending on the business and market, but the method is more or less the same. Open tendering, limited tendering, request for proposal, two-stage tendering, request for quotations, and single-source procurement are the six types of procurements.
Armed with these approaches along with strong 360-degree analysis and supported with technological aids, procurement market research makes a strong case in credibility that businesses across spectrums should seriously consider, nurture and invest in.
