Market Intelligence & Analytics

Global Digest
June 2014
Background
CASME RoundTable meetings on the procurement of market intelligence and analytics were held in London, Melbourne,
Boston, Mexico City, Sao Paulo and Stockholm during the period from November 2013 to May 2014. Between five and
eleven companies were represented at each event. The following main topics were discussed:

 Market intelligence and analytics strategy and scope

 Data mining, warehousing and analytics
 Application of market intelligence and analytics
 Market intelligence suppliers
 Data privacy and regulation
 Social media.
This Digest provides the key points, good practices and insight into future trends identified by delegates around the
world. Full notes from each meeting are available on the subscriber-only CASME Resource Centre.

Content Summary
Market intelligence and analytics strategy and scope

 Market intelligence (MI) generally refers to information on suppliers, markets, costs and risk, rather than market
research for sales and marketing purposes. It includes market analysis from external sources, as well as
internal purchase order and invoice information. The information is frequently unstructured and may be
gathered using ad hoc methods without a systemised approach. There is significant attention to spend analysis
but the focus is now shifting towards supply markets
 Most companies actively use MI as part of their sourcing process and category planning, and global MI teams
are often in place. A centralised approach pools resources and avoids duplication of effort. Category managers
are typically responsible for managing their MI requirements, but procurement departments are establishing
formal support teams to purchase, collate and deliver the information
 Stakeholders may sometimes not accept the information provided by Procurement and may question its quality
and validity, and perceive it to be inferior to their own sources and opinions. The key to Procurement providing
optimum service is to be involved with stakeholders’ category planning and reviewing processes so that
strategies can be adjusted and the MI requirements timed accordingly. The MI must be relevant and well
presented, using engaging summaries and graphics, otherwise its value may be perceived as being low,
resulting in poor internal use of the output, which makes the justification for investment in MI more difficult
 Procurement should keep up-to-date with supply market trends to support stakeholders. Information requesters
should be asked to clarify their aims and requirements, as well as how they plan to use the information, in order
to ensure the appropriate MI is provided efficiently.
Data mining, warehousing and analytics

 Good secondary non-commissioned research sources for collecting market indicators for different categories
include competitors’ suppliers, suppliers’ suppliers, proxy index pricing of products and predicted price
movements on products
 Internal and external systems used by organisations to extract spend data include accounts payable, general
ledger, enterprise resource planning (ERP) systems, credit cards and P-cards. An automated clearing house
(ACH) or bank feed approach is less favourable due to the timeliness of the data and labour intensive audits
required upon receipt of the data
 Many organisations have yet to implement central MI databases and few companies have a centralised
repository to store other MI data and information such as surveys, RFxs, meeting notes and supplier
evaluations, in an easily searchable format
 Use of data warehousing is increasing, but in some cases data is stored internally due to the need for manual
monthly data error correction and cleansing. Cleansing, organising and analysing raw data can be a challenge
 Where a database exists, Procurement manages it as a corporate tool and provides access to stakeholders for
spend management purposes. Terminology and category spend codes have to be uniform for analytics to be
reliable and credible. Third parties can be engaged to perform this function
 Global companies must be specific and aligned across countries in the use of unified commodity codes and a
single language. Best practice is to enforce the use of English, despite the availability of tools that will support
translation
 Companies apply industry standard analysis tools such as Porter’s Five Forces, Gartner’s Magic Quadrant and
SWOT and PEST analysis.
Application of market intelligence and analytics

 Part of the value Procurement derives from MI information is using it to reduce risk, increase cost savings and
provide impartial analysis of competitors in the marketplace. Using external MI sources helps to justify
purchasing decisions and challenge current assumptions
 Macro level details such as economic forecasts, labour rates and commodity prices are being used to forecast
market trends. Procurement performs exercises in internal and external forecasting and correlates the two. MI
is not generally used for developing cost structures
 The creation of a strategic category council may assist in the identification of alternative MI sources, as well as
assessment of the reliability of current suppliers
 The frequency of financial analysis is dependent upon risk level and can range from every three months to
annually. The release of financial reports can be an efficient basis for scheduling the analysis. For indirect
spend, it is recommended that companies use all their available tools and subscriptions in order to achieve the
full return on investment (ROI). A survey can be used to identify which tools are in use by stakeholders and it is
important to gain group consensus, buy-in and ownership.
Market intelligence suppliers

 Suppliers of MI may be selected on the basis of geographic focus, industry sector expertise, or functional
specialisation. MI requirements may be entirely outsourced to a specialist supplier, partially outsourced to
supplement the in-house team, or can be managed entirely in-house using contracted suppliers
 It is good practice to minimise the loss of information and knowledge when outsourcing MI, switching suppliers,
or bringing it back in-house. Contracts must anticipate and cover these transitions. The use of offshore
suppliers needs careful consideration of language, business sector familiarity and project concept
 Category managers may specify suppliers for the type of MI they need, but Procurement often sources
alternatives in order to ensure that the company is obtaining best value. Tier structures are implemented with
preferred vendors that are considered partners for innovation
 As there is not a sole source for most MI requirements, it is necessary to have multiple suppliers and it can be
difficult to determine which to eliminate in rationalisation exercises. However, limiting the number of MI
suppliers may help to establish relationships, knowledge and understanding of requirements, which increases
the quality and continuity of data
 Scorecards are often used to measure performance. Customer satisfaction surveys are conducted with
stakeholders after each piece of work and the results used for supplier review meetings. Interim reviews may
be needed to check that the project is proceeding as required and to manage the outcome
 Some companies develop supplier profiles and include published financial reports. If the supplier will not provide
financial information they are classified and managed as high risk. Best practice is to create an early warning
system fed by a combination of reporting processes and issues raised from internal and external sources.
Processes must be in place to ensure they do not stay on the risk list indefinitely. Including financial reviews as
part of a quarterly business review (QBR) can help with monitoring suppliers’ financial stability and potential risk.
Data privacy and regulation

 Legislation for data protection governs MI and information sharing on individual data. It is important to ensure
compliance whenever data is exported for enrichment. Contract clauses and audits can be used to address this
 Buyers must be aware of data regulations and ensure that suppliers operate with ethical integrity and do not
expose the company to any liability. Cross-border complexities heighten the need for diligence
 Companies rely on legal and compliance teams to ensure all requirements are met. Templates can be used
during the selection stage, with specific questions designed to ascertain any risk of non-compliance. A third
party risk management company may also provide research on specific regulations. Another option is to have a
regulation team in place focused on direct spend and loss prevention
 Data privacy, regulations and risks involved with cloud based systems are the responsibility of IT teams. Best
practice is to prohibit personal information being stored in a cloud based system. Information that is sensitive or
critical should be locally based and managed independently. When using these systems for risk management
data, failure to provide financial information would place the vendor in the highest risk category for monitoring.
Social media

 Companies share ideas, raise problems, create groups and achieve quick resolutions by using internal social
networking software to circulate MI within organisations
 There are useful online sources of information available to buyers via social media networks; these include:
o Researching peers on professional social media sites to communicate, brainstorm and share learnings
o Using search engine news services to receive alerts on relevant news items
o Searching for procurement related blogs, suppliers, regulations or other market information
o Accessing video clips of procurement professionals providing insight and comments.
Future Trends
 Implementing a single source supplier strategy rather than having to use multiple suppliers to obtain information
 Companies are aiming to improve access to information and to provide a global company-wide MI ‘meta data’
portal and to enable sophisticated functionality
 A single MI site is required, with centralised uploading and easy access for users, which involves input from IT
 Disruptive innovation could provide a step change in approach or technology and may result in transformation of
suppliers, models and offerings.

Important:

These notes are a summary of the facilitated discussions held between the delegates at this meeting. We recommend
that any references, particularly to legislation, or recommendations contained in these notes are cross-checked by the
reader in order to verify their accuracy prior to being acted upon. Any third-party organisations named in this document
are not recommendations but are examples of companies mentioned during the meeting that might be considered when
tendering for appropriate goods or services. These are not intended to form an exhaustive list and it is likely that other
organisations not listed may also provide similar goods or services.

Market Focus Research Limited

European Head Office: 1 Holt Barns, The Kilns, Frith End, Bordon, GU35 0QW, United Kingdom
Telephone: +44 1420 488 355 Fax: +44 1420 478 412
www.casme.com info@casme.com

Americas Asia Australasia

51 JFK Parkway, First Floor West, Short Hills, 1 Fullerton Road, #02-01 One Fullerton, Circular Quay, Level 34 AMP Tower,
New Jersey 07078 USA Singapore 049213 50 Bridge St, Sydney NSW 2000
Tel: +1 973 218 2566, Fax: +1 973 218 2401 Tel: +65 6832 5584, Fax: +65 6408 3801 Tel: +61 (2)8216 0942, Fax: +61 (2)8216 0701