Why Your Procurement Organization Needs a Market Intelligence Center of Excellence

market intelligence

Market intelligence should be a core competency of procurement organizations. Yet far too many companies and public sector organizations either leave market intelligence to individual buyers and category managers to manage informally or outsource aspects of the function to a third party without sufficient internal understanding or investment to leverage the information that comes back.

Spend Matters suggests that procurement organizations above a certain size – say, $2 billion in spend – should consider developing a market intelligence center of excellence (CoE), even if the center is just staffed by a handful of analysts conducting research or resources that delegate and manage work with internal and third-party intelligence providers. To be sure, research provided to Spend Matters by the Hackett Group ranked supply market intelligence as the third most important priority – behind specialized sourcing support and analytics – when building a procurement CoE.

Last week, at the Institute for Supply Management’s Metrics and Analytics Symposium in Philadelphia, Grace Zacharek, DuPont’s global market intelligence team leader, gave a great talk on all the steps involved in building a global market intelligence function for procurement. No doubt some of her advice is best aimed at larger companies – develop a competence to turn around certain projects in 24 hours or less, have “follow the clock” resources in Asia – but much of it is extensible even to larger middle market companies that want to develop a proactive understanding to drive market intelligence centered on suppliers, supply markets and categories, among other areas.

Zacharek recommended defining up front what the market intelligence CoE will cover. As an example, key intelligence areas, she suggested, might include industry dynamics, cost (e.g., product cost models), commodity management, technology, markets and suppliers.

During this definition step, it is also important to understand how a marketing intelligence CoE will find information. Zacharek suggested intelligence can come from a range of sources, including:

  • Internal data (e.g., spend data, vendor master information, ERP data)
  • External experts (e.g., analysts)
  • Dictionaries
  • Market research reports
  • Social media sources
  • Technical patent databases
  • Supplier inputs
  • Search engines

Creating the Function and Skills Required

The primary purpose of a market intelligence CoE function in procurement, Zacharek observed, should be “to make smart decisions and realize sustainable cost savings and growth – and to make recommendations actionable.”

The best resources to staff a center bring a variety of skills included:

  • “Excellent problem solving and strategic analytical skills”
  • “Project management, including ability to initiate or recommended changes when appropriate”
  • “Ability to facilitate interactions with key stakeholders”
  • “Ability to identify appropriate tools to increase depth of analytics or opportunity identification”
  • “Ability to do market research, data collection and rapidly form recommendations”

As our “how-to” guide to building a procurement market intelligence CoE continues, we will turn our attention to the work a CoE does as well as overall market intelligence research and delivery processes.

But even before you establish your own CoE, you should strengthen your own in-house research on procurement performance as well. Participate in the ISM / Spend Matters snap poll* on procurement metrics, and you’ll not only get to benchmark your value mix and the competencies you’re investing in against others today and in 3 years but also see how others organizations measure their more complex value streams.

*The poll only takes 5-7 minutes and will be invaluable in facilitating our session. If you take part in the poll we will also share back not just the results, but also our learnings from this part of the ISM symposium (including additional metrics on measuring market intelligence functions).

After we’ve analyzed the data, we'll send you an invitation to a webinar where we'll show the study results and a few examples of how some of the leading companies are bringing rigor to this area. You will also receive a copy of the webinar presentation.

All responses are confidential and will only be reported in aggregated form. By responding to this survey, you acknowledge and consent to use of data provided.

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