Having prioritise the products or services to conduct supply market analysis, we now move on to sourcing information relating to the market conditions and they may be obtained from the following sources:
1. Primary data field research that can use one or more approaches, such as observation, analysis of internal records such as sales trends, trade missions to suppliers’ operations and questionnaires. Trade association conferences offer a good opportunity to network and learn more from other people who know a lot about what is going on in the industry.
2. Secondary data statistics and annual reports issued for supplier companies. Trade journals provide recent updates to what is happening in the industry. News headlines, trade websites and libraries also provide multiple leads for further information. Investment analysis reports, as well as interviews, can provide very good information on what is happening in certain industries where they are investing.
3. Government sources, e.g., abstracts of statistics, economic trends, employment gazette, business monitors, central bank reports, etc.
4. Non-government sources including chamber of commerce, professional associations, press reviews, economic forecasts, etc.
5. Trade consultants who can provide information, but they are very often costly.
6. Existing suppliers and customers with the power of snowball sampling where you can be referred to other experts.
The location of potential useful sources of supply is a major responsibility of the Procurement function and can be a huge challenge today with the increasingly complex buyer’s needs in view of technological advances, increasing ‘concentration’ in supply markets with continuous trends of takeovers and mergers, and increased specialisation among manufacturers with a greater proportion of their needs outsourced.
The good news is that the internet has revolutionised organisations’ ability to locate and collect information on potential suppliers. Sources of information on certain potential suppliers can be collated from previous internal recorded performance, annual reports, catalogue library, publications, trade directories, exhibitions, other buyers, sourcing agents, distributors, embassies, trade consultants, existing suppliers,
customers and colleagues.
There are multiple sources of market and supplier information available. However, the reputation of a particular source must also be investigated and ascertained. The key here is to triangulate, which means that the buyer needs to explore, compare and contrast data from multiple sources before he or she can validate it.
The whole point of conducting market research is to understand the prevailing market conditions and the ability of current or potential new suppliers to effectively deliver the product or service. In this respect, supply market intelligence becomes one of the most important and critical stepping stones for an effective sourcing strategy. As one manager noted, “Supply market intelligence may be the only competitive advantage of the future!”
|Please read ‘The nature of sourcing decision’ on pages 198 – 205 from your textbook Procurement Principles and Management, 10th edn, England: Prentice-Hall, Pearson Education Limited by Baily, P, Farmer, D, Crocker, B, Jessop, D and Jones, D (2008).|
|Question to activity 3.3
||Suggested answer to activity 3.3