market intelligence for supply chain management

Market Intelligence for Supply Chain Management

Webinar presentation June 4, 2009

Webinar Content Outline

•  Corporate Supply Chain Management functions identified

•  The missing piece of the puzzle – The need for Market Intelligence

•  Market Intelligence solutions defined

•  Conclusions

www.globalintelligence.com

Corporate Supply Chain Management


Corporate Supply Chain Management

– page 4

Connecting the worlds of internal customers, suppliers of goods and services, and the SCM world of project management, ethical decision-making, strategy, and cost savings

Purchasing

The Purchasing Process (centralized procurement)

1.  Identifying a need

2.  Creating a requisition which records budget owner & expenditure

3.  Buyer may rely on Approved Vendor Listing (AVL) to know the appropriate vendor and price for the PO, or

4.  Buyer conducts a Request for Quotation (RFQ) from the most qualified suppliers in the buyer’s network

5.  Buyer transforms requisition into a Purchase Order (PO)

6.  Responsible to coordinate delivery and customs clearance

7.  Responsible for ensuring the supplier’s invoice matches the purchase order, and arranging with accounts payable for payment

8.  Long term supplier relationship management

www.globalintelligence.com – page 5

Procurement organization


Procurement Design Process:

• Business Process Mapping

• Benchmarking

• Best practices and alternatives

• Organize teams servicing lines of business or centralized resources catering to internal customers’ needs

• Goals and metrics: •  Maximized savings targets

•  Maximized percentage of spend using suppliers from approved vendor listings

•  Maximized volume of Requisition-to-PO transactions completed in less than 1 day

•  Minimized volume of PO-invoice mismatches

• Maintenance of the Approved Vendor Listing

• Maintaining contract management process: negotiate contracts with suppliers for best pricing and other terms

Logistics and Inventory Management

Logistics is the management of inventory after purchase or production

• Strategic decision-making regarding the approach to inventory deployment

• Distribution center locations and operations

• Inventory forecasting (purchasing needs assessment)

• Spare parts management

• Operations management


Strategic Sourcing

Strategic Sourcing is problem solving and needs fulfillment using the best combination of methods and internal and external sources available

• Needs assessment !  Business Process Mapping

!  Resource analysis

!  Synergy analysis

!  Total Quality Management

• Evaluation of supply markets

• Management of the bid process (RFP, RFQ, RFI)

• Achieve best costs, quality and schedule

• Minimizing risk



The missing piece of the puzzle – Typical SCM experiences

“I discovered the need for targeted research and analysis, but

did not have the required skills or resources to execute”


Purchasing – Logistics - Sourcing

Save money

– page 10

Reduce risks


Market Intelligence – the missing piece of the puzzle

Access to information •  Google •  Suppliers who tell you who their

competition is •  Buyers who have been in the

business for many years •  Collecting many competitive

quotes •  Gossip

– page 11

“If I had access to Market Intelligence services I would have been even better at saving money.”

Purchasing Research Skills required •  Finding potential suppliers •  Complicated relationships

between suppliers and the competition

•  Understanding market pricing


Case Example: Market Intelligence in Purchasing

•  Global pharmaceutical contract research organization (CRO)

•  Buyer was required to issue a request for quotation (RFQ) for dry ice

!  Dry ice is used to keep bio samples cold during transit to labs

•  The search for potential suppliers started with Google, and moved onto asking the incumbent supplier who their competitors are

•  The firm did not include all pharma-grade dry ice suppliers in the RFQ

– page 12

“A partner screening and evaluation project would have offered the CRO a complete list of the dry ice suppliers meeting the company’s requirements, and a ranking of the firms most aligned with the company’s needs.”



Procurement Organization Research Skills required •  Benchmarking •  Best-in-class comparisons •  Tools available for ERP &

purchasing management

Access to information •  Google •  Personal networks •  Business school text books •  Suppliers

“Market Intelligence can tell you whether it is better to focus on maximizing savings or maximizing internal customer service – more importantly, Market Intelligence can tell you how.”



Access to information •  Google •  Cost – benefit analysis •  Word of mouth •  Industry publications and

newspapers •  Logistics & Inventory

– page 14

“If I had a qualitative country profile I would have known not to open a distribution center in a country with so much red tape .”

Research requirements •  Finding DC locations •  What are the hidden costs of

opening a DC in Europe? In Asia? In the Americas?

•  What are the economic factors impacting inventory forecasts?


Case Example: Market Intelligence in Logistics •  Global aerospace manufacturer •  Spare parts distribution center

location decision was made based on cost – benefit analysis

!  South Asian location was an inexpensive choice, close to customers in Eastern Europe, the Middle East and all of Asia

•  After it started up the firm realized that local government red tape was preventing the movement, sale, and removal of spare parts from the depot

•  The firm was stuck paying for the parts, the warehouse, and the labor

– page 15

“A qualitative country profile combined with the cost – benefit analysis would have raised a red flag regarding the political powers of the host government over international business.”



Strategic Sourcing Research requirements •  Understanding the alternative

supply network •  What turn-key solutions are

available for a firm changing its overall strategic direction?

•  What is the forecast for the industry?

Access to information •  Suppliers who tell you who their

competition is •  Buyers who have been in the

business for many years •  Collecting many competitive

quotes

– page 16

“If I had known that a single supplier could handle all of the firm’s production inputs, I would have

saved the company a lot of time and effort.”



•  Working for corporate supply chain management, internal customers often want everything yesterday (get the project done really fast!)

•  SCM managers are also involved in: !  Managing vendor relationships !  Negotiating contract terms and conditions !  Cutting Purchase Orders (POs) !  Balancing payables !  Forecasting inventories !  Performing needs assessments

•  …and often do not have time for this research and analysis

– page 17



•  The Market Intelligence service offerings can enable SCM professionals to have better information, and therefore offer quicker and more effective strategic decision-making

•  Market Intelligence professionals are trained to conduct research, perform primary research interviews, offer objective analyses, and manage projects with strict restrictions

– page 18


Market Intelligence Solutions

Solutions for the purchasing process

• Company profiling !  As the simplest form of supplier

intelligence, a company profile provides basic information about suppliers

• Supplier deep dive !  In order to properly evaluate the

reliability, strengths and weaknesses, and capacity of a supplier, a deep dive study, utilizing various types of information sources and more rigorous analysis methods, can reveal valuable insight

• Supplier screening & evaluation !  When looking for new or alternative

suppliers, a thorough methodology can lead to significant savings and value in the partner relationship

• Rapid response background checks !  As a different type of research process,

a pre-defined type of background check can be performed on new potential suppliers on short notice if access to a global network of information sources is available



Supplier screening & evaluation

•  A specialist in market intelligence is in a good position to !  Find information about potential

suppliers !  Evaluate relative strengths,

weaknesses of suppliers !  Evaluate the best fit using both hard

and soft criteria

•  The evaluation process includes !  Defining an ideal profile for a supplier !  Comparing potential partners against

the ideal profile !  Comparing potential partners against

each other

– page 21

Long-term strategy Company values

Management experience

Technical staff

Backup facilities

On-line capacity Error handling

Logistics

Inventory

Responsiveness

Volatility

CAPACITY

CULTURE

QUALITY

RELIABILITY

Ideal partner Target company

Down-time


Rapid response background checks

– page 22

•  In cases where suppliers change frequently and new unknown potential suppliers emerge, a company may need to make a quick decision on choosing a supplier

•  Such a decision can lead to the discovery of a good new supplier, or alternatively to a disastrous choice

•  The need may thus be for a rapid background check on unknown suppliers

•  The research process in a nutshell: !  Define a template for the information needed about a new supplier – this information is

usually very specific to the supply-chain or the process at hand (track record or references, capacity, bottlenecks, weak spots)

!  Make a framework agreement with a market intelligence company that has global access to this information

!  Whenever the need arises to do a background check on a new company, the market intelligence company already knows exactly what to look for, why the information is needed, and can find the information for any company in any part of the world – the findings can be delivered very quickly

Solutions for strategic sourcing • Market sizing & forecasting

!  Market sizing & forecasting can help strategic sourcing in two ways: •  By forecasting the demand for end-products, and therefore the need for inputs

•  By forecasting the market development of inputs

!  Estimating and forecasting the market size for end-products is usually part of a strategy or business planning process, or the process related to launching a new product

!  Efficient planning of supply-chain needs benefits from the foresight of the development of the market for the end-product

!  Forecasting market developments –and price developments in particular – for inputs enables better purchasing decisions sourcing

• Market monitoring !  An important part of strategic sourcing is being aware of changes in the market

environment

!  A market monitoring solution can provide supply-chain managers with timely insight about the markets for inputs, developments in technologies, macroeconomic developments, suppliers, competitors, etc.

– page 23


Market sizing & forecasting

•  In order to arrive at a good estimate, triangulation and validation of results is required

•  A proper market sizing study therefore uses a wide variety of data sources and estimation methods

– page 24

Top-down model Bottom-up model

Total market size

Segment total Segment total

Supplier 3 Supplier 4 Supplier 1 Supplier 2 Total market size

Segment total

Indicator 2 Indicator 1

Segment total

Indicator 4 Indicator 3


AreaofExpertise RapidResponseResearch StrategicAnalysis ContinuousMonitoring

Purchasing

CompanyProfiling PartnerScreening&Evaluation SupplierMonitoring

SupplierDeepDive

ProcurementValueChainAnalysis CompetitorBenchmarking

Logistics

MarketProfiling RegulatoryMonitoring

CountryRiskAnalysis CompetitorBenchmarking

ScenarioAnalysis

MacroeconomicAnalysis

PESTELAnalysis

StrategicSourcing

MarketSizing&Forecasting PriceMonitoring

TrendAnalysis SupplierMonitoring

SupplierDeepDive MarketMonitoring

IntelligenceWorkshopsBuildingAWorld‐ClassMarketIntelligenceDepartment

Strategicquantitativeandqualitativeresearchandanalysistechniques


Conclusions


Conclusions

Requirements: •  Capacity •  Time for research •  Skills •  Research and analysis •  Objective perspective •  Market Research Partner

Results: •  Purchasing is more efficient

and effective •  Procurement organization is

best-in-class •  Inventory management risks are

minimized •  Strategic sourcing is aware of

all possible suppliers, sources, solutions


Conclusions

•  Better information enables strategic decision-making

•  SCM professionals do not always have the research and analysis training or the time to conduct thorough investigations

•  Bringing together the market intelligence needs of SCM professionals with the solutions available in this market can enable strategic decision-making for all levels of corporate supply chain management


Thank You for Your Attention

Download the free GIA White Paper: Market Intelligence for Supply Chain Management

The report has been published under the GIA White Paper series and is available at www.globalintelligence.com.

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