Supply Market Intelligence: Think Differently, Gain an Edge
November 01, 2010 - SCMR Editorial
|Download Article PDF|
Facing increased uncertainty in economic markets, organizations are increasingly aware of the need to closely monitor market conditions and respond appropriately through improved supply chain strategies. As more organizations seek to build sourcing strategies that capture cost savings opportunities, they are finding major shortfalls in the market intelligence and cost modeling capabilities that form the basis for effective strategies and negotiation. Further, they are discovering that the needed integration of market intelligence into operational decisions, including budgets, profit objectives, market pricing, technology insights, global expansion is generally not well executed.
The result is misalignment between demand and supply planning, and major gaps in operational performance and risk mitigation. To address this situation, organizations need to develop deep market intelligence, that will provide insights into core elements of market trends, commodity pricing, global capacity, government and regulatory changes that could impact global sourcing. They also need insight into economic trends that will impact their organization’s supply chain. Unfortunately, these capabilities seem to be lacking in most organizations, based on the results of a study we recently conducted among supply management executives. Our research is based on interviews with subject matter experts in a number of industries who have deployed or are in the process of deploying centers of excellence for supply market intelligence. In addition, we surveyed 89 global supply chain executives through the International Association of Commercial and Contract Management (IACCM).
This article explores the concept of supply market intelligence (SMI). We describe how companies are structuring their supply management organizations to optimally collect market data, identify best practices for synthesizing and deploying this information, and establishing metrics for measuring outcomes of SMI. Further, we discuss how some leaders are now beginning to extend the application of SMI to other strategic business decisions that lie outside the realm of contracting and category analysis—an activity that is positively impacting decisions in annual budgeting, customer markets, technology integration, and financial budgeting. We believe that the innovative application of SMI to these areas, though still in a nascent stage, will enable many organizations to achieve superior market performance and outcomes.
|SUBSCRIBERS: Click here to download PDF of the full article.|
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!