The supply chain in most modern organizations is complex and dynamic due to constant changes in providers and industries, materials and commodities, and market dynamics. Even though most organizations' ERP systems are exceptional organizational tools, they are generally blind to outside data.

Procurement market intelligence is gradually gaining strategic importance in most companies, as purchasing professionals strive to accomplish more in less time.

Procurement intelligence helps companies course-correct and formulate strategic solutions while navigating a growingly volatile supply chain. Deploying the right technologies and processes allows businesses to alleviate risks, make tactical decisions, increase transparency, and establish a maintainable procurement process.

Deloitte's CPO survey (2021) says digital transformation is a priority for CPOs, particularly because obsolete systems such as paper-based processes, emails, and Excel sheets lead to inadequate data management. The same survey reported that "data quality is one of the greatest blockades to the efficient application of digital procurement technology”.

How Procurement Intelligence Helps Companies Build A Competitive Advantage?

Building a competitive advantage can help your company minimize costs across the value chain, ensure more efficiency while delivering services and goods; it also helps with innovation, manages supplier risk, and boosts supply chain resiliency.

Procurement intelligence uses data analytics and enables businesses to make their procurement process more cost-effective, sustainable, and innovative. It isn't only about minimizing costs and becoming a forward-thinking organization. Companies that go for a complete digital transformation can take advantage of the enhancements procurement intelligence can offer. 

Cost-efficient

Now that there are new technologies like blockchain, robotic process automation (RPA), artificial intelligence (AI), and big data, procurement professionals should use a different method to cut costs in the procurement process itself.

Fewer people are needed to do procurement tasks, and decision-makers need to think about how investing in disruptive technologies can save money on labor costs.

The more these technologies are used, procurement can be a smaller and more virtual part of a company, and the savings from lower overhead costs trickle down to the bottom line.

Companies that spend less on in-house employees and use technology and the "gig economy" to hire remote specialists as needed will be more competitive than companies that use traditional procurement methods.

Gain in-depth supplier insight

When collecting supplier market intelligence, procurement software can come in handy in showing where to buy and how to buy.

Many companies report struggling with poor supplier performance and its adverse impact on supply chain performance. 

In fact, according to the 2020 Supplier Information Study, nearly 93% of procurement and supply chain leaders have seen bad things happen because of false information about their suppliers, and about half (47%) see such incidents happening regularly.

This is where procurement software and tools come in handy. They allow you to compare supplier performance and pricing, so they can work with tried and tested suppliers who are known to consistently provide great value. 

Negotiate better bids

Procurement tools allow you to assess the market price better and negotiate accordingly. It prevents you and your firm from going into a commitment blindly. You get to do your research! 

You can use the following three steps to bolster your procurement negotiations:

• Have a grasp on your stakeholders' objectives and have a plan B. To be smart, operational procurement teams of today must do more than just "three bids and a buy." They have to work together across the enterprise to ensure that what they are doing fits the enterprise's overall goal. They need to ask some questions about the people they work with and themselves. For example, "Should this be put out to bid or sourced strategically? Do we already have a contract or supplier set up to meet the business need? Would this purchase go against company rules?"

• Know what your vendor is looking for: This helps determine which products or services are most strategic to the vendor. You can cater to them accordingly

• Create better category plans: Over time, category intelligence can be built with the help of procurement software. Category managers set up categories and divide company spending into groups based on products or services that are similar or related. These groups are then organized by value, supplier, type, or volume. These category plans are looked at by procurement intelligence, which leads to a larger scale and better relationships with suppliers.

Alleviate risk

Intelligent procurement enables firms and businesses to make more tactical sourcing decisions. Procurement allows you to consider internal and external factors such as purchase needs and budget and how to tackle them in terms of supply shortages. 

Automation tools help minimize the risks associated with wrong procurement decisions. This doesn't only mean your firm gets to work with the gifted vendors but also reduces the margin for human error. 

Here's how: 

• Visualize supply chains: It can be difficult to stay on top of the biggest threats to your operations given the procurement complexity, particularly your supply chain. You might find it simpler to identify suppliers, maintain relationships, and have a consistent perspective of where the biggest risks are at any given time by improving visibility throughout your supply chain. You can improve your supply chain visibility through enhanced collaboration with competitors, suppliers, and partners. 

• Introduce automation wherever possible: Human input is always needed in procurement processes. To decrease human error in items like your contracts, you should automate as many processes as you can to save time that can be used to enhance supplier relationships.  

• Create a robust vendor sourcing strategy: Creating a clear list of requirements for vendors to complete before working with them is the simplest method to reduce risk. Commercial factors and environmental and social governance (ESG) components like supply chain sustainability can be included in your sourcing strategy and requirements.

Formulate effective category plans

Procurement software also aids businesses when it comes to creating category data over time. Category managers can create categories and services and organize the latter by value, type, supplier, or volume. Procurement data evaluates these category plans, leading to enhanced scale and stronger supplier relationships. 

Here are some great strategies:

• Research the supply market: The fundamental procedures in this phase involve segmenting the supply market by area and product type, comprehending the primary forces that influence price development, and examining the economics of the relevant markets as well as the cost structures of suppliers

• Analyze current suppliers: Conduct a thorough analysis of all the suppliers being used, particularly how the business unit fits into each supplier's portfolio, to determine what negotiating leverage is available

• Perform internal and external benchmarking: Compare procurement techniques across all geographies and business units of the corporation, taking into account costs, quality, operational procedures, and other indicators.

Increase sustainability

Your business must explore sustainable options when it comes to supply chains. Procurement intelligence makes it easier for companies to align themselves with the right vendors and distributors. 

This helps them with a future projection of their costs, resources, and procurement processes. It is also good news for firms looking to become more environmentally conscious and economically sustainable. 

According to research conducted by McKinsey, using procurement processes is an excellent way to reduce risks related to Environmental, Social, and Governance (ESG) criteria and find ways to make minor improvements. It can also help ensure that procurement teams and the people who work with them know how their decisions affect the environment and society.

Promote innovation and growth

Companies frequently use data analysis to uncover patterns, identify process flaws, and comprehensively view their business. Intelligent procurement enables you to learn new information about your business, suppliers, and industry, so you may develop fresh ideas for fostering innovation and growth.

Here are some ways you can streamline your business from innovation and growth with the help of procurement tools: 

• Centralizing data 

• Gain more spending under management 

• Qualify for more purchase discounts 

• Consolidate your purchase order 

• Change spending behaviors 

Optimize your workflow

Identifying areas where automation can improve procedures is a clear advantage of intelligent procurement. For instance, automatic notifications about contract renewals can help businesses save money and improve their relationships with their vendors.

When taking the time to optimize a business's indirect materials, procurement intelligence can pay off in a big way. However, it may require a change in how the company thinks. Procurement professionals must be open to new ideas and technological tools that can help streamline workflows and manage the whole process, giving them the information they need to be analytical.

Wrapping Up

The right procurement intelligence partner can provide buyers with timely, tailored insights into various markets and spend-related areas. These authenticated and expert insights will assist sourcing managers in making the right 'buy or no buy' decisions, ensuring the procurement organization stays ahead of existing competitors and manages fundamental processes more effectively. Are you ready to gain a competitive advantage through procurement intelligence?