Market Intelligence should be a procurement professional’s best friend. It ensures that they make informed decisions throughout the sourcing cycle rather than relying on estimates or hunches. With the proper insight, procurement can cut costs, create new opportunities, optimize supply chains, and more. But for your procurement team to collect worthwhile data, you’ll need an effective system in place.
In previous installments of this series on market intelligence , we’ve explained how to choose the right individuals for your team, establish the proper criteria, and use your resources. We’ll wrap up the series by giving you some best practices on asking the right questions.
You’re probably already aware that identifying internal subject matter experts is imperative during any sourcing project. These specific individuals will equip you and your team with the information you’ll need to go forth with your project. Don’t be afraid to engage with other departments or stakeholders who might have product knowledge that you’re missing.
After you determine who these individuals are, you need to ask them the right questions. The information you request should complement the unique features of that project. Your team needs to figure out what you know, what you want to know, and even what you don’t know you want to know. Here are four key questions you should always remember to ask:
1. When was the last time this product was sourced?
If you have information on how the most recent sourcing event, you can build an estimated timeline. You’ll also get a good grip on the success of the last sourcing attempt and identify which processes you may want to update or perform differently. The biggest benefit to asking this question is learning the lessons the last sourcing manager had to learn without going through it yourself. Keep note that it’s helpful to collect any supporting documentation or data from the last sourcing event so you can make inferences on your own.
2. How old is the data that you currently have about the product or service?
Putting an age to the data you’re analyzing also several advantages. For one, you can detect if prices are fluctuating and in what direction they are moving. You’ll also be able to determine your current status with that supplier. Are you still sourcing from them under the same contract? Has your company kept in touch? Have they kept in touch? This information is also important to ensure you’re not making decisions based on outdated or irrelevant data.
3. How static is the data?
The age of the data becomes more or less relevant depending on how static the data is. Different products or services come from different landscapes and the nature of that market is relevant to your sourcing process. Is this a timeless product that doesn’t see major shifts in pricing and availability? Or is this a product with inconsistent costs that are sensitive to changes in the market?
4. What meets my requirements?
Your requirements for a product should have specific and well-informed standards. Avoid simply listing three specifications that match the product you’re already sourcing. Be able to discover the wide range of products that could fit into your supply chain so that you have an array of options and can make the best decision It’s smart to cast the widest net possible and let suppliers come to you with alternatives that you may not have considered.
You should be able to check the preceding answers off your checklist, but don’t limit yourself to just the basics. Take a larger look at your project and ask yourself if there are any considerations you didn’t address. Even if you think a colleague or stakeholder will know the answer, they might surprise you or suggest an idea on how to answer that question.
That said, you also want to make sure you know when to stop collecting data. After all, the data collection process is an investment in time and you’ll want to monitor how much you’re getting out of it. There's no such thing as too much data, but it will lose its value after a certain point.
Whatever the strategy may be, remember each sourcing initiative has its own set of challenges and you shouldn’t get stuck in a cookie-cutter format of market intelligence retrieval.