Your supply chain management (SCM) team needs market intelligence to assess how it's performing, how the competition is performing, and how the business can better gain a competitive advantage. This information is crucial and will help you manage spend and supplier relationships more strategically.
In Part I of our series Market Intelligence Series, we discussed the various skills each individual on your team should possess to identify and assess data effectively. Once you’ve found your dream team, you’re going to need to determine what exactly you are trying to find. Market intelligence will help you get a better hold on your own company, your competitors, and your industry as a whole. That’s a lot to cover-- and it's part of why market intelligence comes in many forms.
Your data could come in the form of global market data, industry benchmarking information, or an overall assessment of current market pressures and risk factors. In any event, you’re going to need to identify which metrics will be most relevant to your project at that specific time.
Today we’ll discuss how you can determine the right criteria. You want to establish metrics that will keep track of how your current strategy is performing and resonate with stakeholders across the business. The metric-establishing cycle should look as follows:
1. Identify what methods you will you use to examine your data.
2. Analyze these methods to see how they will play out.
3. Apply the proposed methods.
4. Continue to develop methods for testing hypotheses to predict results.
Because different initiatives call for different definitions of success, you should expect that your metrics will fluctuate from project to project. You will also have different types of metrics within a single project. There are two major types of metrics: hard metrics and soft metrics.
Hard metrics are used to measure tangible things; usually, it involves quantitative data that can be easily visualized. A typical example of hard metrics would be actual hard dollar savings projections or the measure of how long a product took to be produced this quarter versus a past quarter.
- Were we able to sell more of product A or product B?
- Did it carry out a process more quickly than usual or more slowly?
Soft metrics are used to measure more subjective and indirect results. Soft metrics do not consist of hard statistics and are usually harder to obtain and envision. An example would be an analysis of a product’s end result.
- Will talking this action help our corporate reputation?
- Do we think embarking on that partnership will increase our opportunities for innovation down the road?
Establishing the proper metrics for each project is essential for productivity. If you fail to measure the effectiveness of a strategic approach, you run the risk of wasting time and using methods that just are not working for your company. Or worse, you’re overlooking the most valuable lines of attack your team has produced. You don’t want to under utilize a strong plan and overplay a weak one. See that your team is properly gauging the success of your projects and consistently generating ideal results.
Now that you know what characteristics to look for in your team and what metrics to look for in your data. Stay tuned for the third installment of the Market Intelligence series. We're going to focus on how to ask all of the right questions.