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The value of good supplier intelligence cannot be understated. Understanding your suppliers and the market is essential in the competitive landscape that we play in. Good supplier intelligence can be powerful and understanding how you interact with your suppliers through the data buried in your own company can elicit amazing intelligence that you can action to not just get better deals in your negotiations, but improve processes and strengthen relationships.
In their amazing book, The Challenger Sale, Matt Dixon and Brent Adamson go through an example of how WW. Grainger started changing their selling approach of MRO. By digging into their own data, they were able to provide insights to 'how' their customers were buying and making reactive purchases to their MRO purchases and then were able to provide recommendations to their customers to change their purchasing habits to reduce costs and increase operational efficiency. This kind of intelligence is priceless. But let's be honest, not all suppliers are going to want to partner with you to supply that kind of information, so it's on us (procurement) to do the digging.
So where do we even start and what should we start looking for? Well looking internally at your own data should always be your first stop. Determining where all your data sits and how it can be accessed is step one. This, is and of itself, can be a HUGE task (seriously - don't underestimate how much work this is). In this process it's likely that you'll start to realize how crappy your data is (don't worry, everyone goes through this). But at least now you know what you need to work on. Once you get access to the info, you need to tie it together. Creating a spend map/profile and graphics of a particular category and how the suppliers within relate to one another (think Pareto charts, bar charts, bell curves, regression charts) are essential to begin to understand the opportunity, seasonality, purchasing patterns and what the potential is.
I won't get into the detail of the analytics here, but I will say that if you don't have a strong analyst on your team, get one. No, not just a junior supply chain person that is filling the analyst role as a career development move. I mean a true analyst. Someone that can make the numbers sing. Stephany Lapierre (CEO of Tealbook - a supplier intelligence company) calls data gold. And she's not wrong. The more data you have and the more data you can make actionable, the more leverage that you develop. And if you don't have the analytical bench strength to dig into your own data, get help! Hiring a third party to help you with this is well worth the money if you can't bring someone on full time to help!
Once you've dug into your own data, what next? Go get supplier specific intelligence from supplier/market intelligence firms. Entire intelligence firms exist that provide intelligence to help you understand negotiation processes/practices, pain points, pressure points, financials, contractual traps, etc of the company that you're going to negotiate with. There are firms that even specialize on teaching procurement teams on how to negotiate with specific categories and suppliers. If the opportunity is big enough, why wouldn't you explore these resources?
In order for procurement to continue to deliver value to its stakeholders and the business and in order for procurement to deliver better value in negotiations, it MUST have good supplier intelligence. It's not good enough anymore to go into a negotiation without it because the salesperson you're dealing with likely knows more about your business than you do. Shouldn't you know more about their business as a result? How can you truly come to a deal that makes sense to both parties if you don't have it? Without supplier data you're flying blind.
Good, actionable supplier intelligence creates leverage, improves process and improves relationships. You need it. Go get it.
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