Supply Market Intelligence in the process and result of gathering information about the various factors those influence the supply market. This can be done internally in our organisation by category experts or can be outsourced to third-party. Many such service providers in modern day are combining market intelligence with technologies like machine learning, data analytics and data visualization.
Supply Market Intelligence mainly include information related to Changes in Supply and Demand and Trends, Supply Market size, utilization, expected expansions/contractions, level of competition, Technological changes, Innovations, geo-political changes in supply market etc.
The relationship between supply and demand greatly influences the prices. Although there are many factors, but in general when supply is poor than demand, prices increase and vice versa.
When there are many suppliers in the market for a product or service, buyers are in strong position to negotiate and get better prices from suppliers. For limited number pf suppliers in market pricing may not be that much flexible. Degree of competition are Full and Open, Limited or Technical, and greatly influence the prices.
Merger, Acquisition and break-ups changes the supply market scenario. Whereas merger and acquisition reduces competition in the market resulting in price increases. Break-ups can increase the competition by increasing the number of suppliers in market. To control this many government review Mergers and acquisitions to tackle Antitrust issues.
Excess capacity of production at producers drives the prices down in market. For new product, capacity contract at producers –pushes prices upward. In rapid sales growth, capacity utilisation increase, which in turn also increases prices, whereas producers per unit cost decrease due to learning curve.
New technologies make old technologies obsolete. So when new technologies arrive old technologies may be available at discounted rates. Sectors where rapid technological changes are there, supply market also changes rapidly.
Government regulation affects the supply market greatly. Like rebates, special schemes can change the supply market scenario. Procurement professionals must keep in watch the government regulations and changes very closely.
To make Market Intelligence more useful, procurement professionals need to understand beyond what has happened in past. We need to have an understand of what might happen, something called predictive analysis. A SWOT like forward looking approach can help us to understand the strength, weakness, opportunity and threat based on internal and external supply make data.
Supply market intelligence data can be collected from many sources like RFI itself, suppliers company website, news articles, company press releases, industry magazines and government publications etc.