Subscribe To Newsletter Sourcing and Procurement Market intelligence: A Value-Multiplier for sourcing projects One of the major mistakes we can make while preparing our category profile is to underestimate the significance of a solid market intelligence department. It is not uncommon to get caught up in the natural complications of a sourcing project -such as scope definition, milestones and approvals, and leave the market intelligence aspect out of it, or at least incomplete. In order to be successful on a project, we need to understand the requirements and specifics of the project. We need to know what type of information is required to research, and assign sufficient time and resources for Market Intelligence (MI). As sourcing takes on increased strategic importance within companies, category managers are being asked to do even more with their limited time. This is especially true while sourcing services, which requires keen attention towards changing economic factors outside the organization, many of which are not even manageable by the company (labor rates, inflation, etc.) Integrating MI & Sourcing: To make the best decisions possible without falling behind, sourcing must ensure it has access to and effectively uses supply market intelligence. In order for us to accomplish this, we must ensure that we are including the key pillars of market intelligence. Generally speaking, market intelligence consists of three pillars. The first is Market insights, which principally involves data gathering -- how to get it, provide access to it, store and analyze it, and the many methods and applications for doing so. This pillar will provide the information on the current supply base, the right price for the right product or service and in general, if we are able to do different things in order to improve our processes: Key Suppliers Key services and products Market overview (local, regional and /or global) Market drivers and restraints Then comes competitive insights, which comprises obtaining information such as competitive dynamics, disruptors and other value levers at play for strategic purposes: Industry trend Best practices and its impact The last pillar is the supplier insights, when gathering and analyzing information becomes relevant to the company and for better understanding of the market: Geographical capability Supplier's service portfolio General capability from each supplier All three ultimately support the goal of enabling accurate and confident decision-making in the procurement process. Negotiation process supported by embedding MI as a part of the sourcing process Infosys BPM started a project of productivity with a client from the mining industry. Market Intelligence was augmented to ensure guaranteed success in the process of negotiation. Using an all-around effort from our Infosys Market Intelligence team, the team was able to come up with a solid strategy to re-negotiate the fuel supply for a client's site located in North America. The information gathered allowed the team to not only understand the fuel market and the different industry indexes and of course the best practices used, but also achieve a great leverage during the final negotiations with the pre-selected supplier. Using tools such as cost models and price escalation formulas found during the market intelligence stage, we were able to conclude a project by $900,000 USD in savings, which represented around 7% in spend reduction for the period. This initiative resulted in a complete turnaround when compared to the previous projects - from similar segment and complexity perspective. During the negotiation stage of the project, Infosys BPM included protection clauses and price adjustment formulas in the contract, protecting the customer against any potential unexpected price increase in raw materials and cost drivers such as petroleum, diesel and other associated products. The market intelligence can empower sourcing and procurement practices to think beyond by providing powerful insights and evaluate costs, and value opportunities for specific category areas of spend. With the support of quality market intelligence data, sourcing can build a stronger position in negotiations, manage risks, and make better informed sourcing decisions in key category areas. It is our responsibility to assign the right amount of time and resources to ensure that we maximize the benefits from this type of study and reports.