market intelligence for supply chain management
TRANSCRIPT
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
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Corporate Supply Chain Management
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Corporate Supply Chain Management
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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
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Procurement organization
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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
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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
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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”
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Purchasing – Logistics - Sourcing
Save money
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Reduce risks
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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
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“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
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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
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“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.”
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Market Intelligence – the missing piece of the puzzle
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.”
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Market Intelligence – the missing piece of the puzzle
Access to information • Google • Cost – benefit analysis • Word of mouth • Industry publications and
newspapers • Logistics & Inventory
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“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?
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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
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“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.”
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Market Intelligence – the missing piece of the puzzle
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
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“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.”
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Market Intelligence – the missing piece of the puzzle
• 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
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Market Intelligence – the missing piece of the puzzle
• 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
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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
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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
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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
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Rapid response background checks
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• 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.
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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
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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
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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
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Conclusions
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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
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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
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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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