Before moving on to the importance of procurement of market intelligence, we shall know about market intelligence. Market intelligence is the term used to explain how your industry is operating and the process of keeping tabs on your competition.
It’s an important part of running any business, irrespective of the size of the industry, and is company-focused. Over the years, the definition has grown to include analysis and analytics and procurement of market intelligence can help in improving your overall business model and projection accuracy.
Market Intelligence Vs Market Research
Market intelligence should not be confused with market research, since it is designed to learn more about customer preferences. Instead, market intelligence should be seen as a branch of market research.
It is also called market assessment research, which is designed to help companies to increase their presence in the market or to move forward in a market. With the advent of market digitalization, the market intelligence space has seen many new digital tools which are useful for companies.
Market intelligence involves building a bird’s eye view of a company’s current market, competition, customers, growth potential, problems, and potential for additional products and services by using several sources of information. Potential sources of raw data include sales logs, surveys, social media, studies, and more.
A lot of businesses make use of market intelligence to provide context for their business intelligence. Business intelligence differs from market intelligence in a way that it refers to more broad information about products and customers such as the total sales within a month, the total number of products shipped, and various other transactions that occur within a business.
Market intelligence focuses more on specific customers, providing demographic and geographic information about what they buy. All of this helps in forming business intelligence analysis.
Importance of procurement market intelligence
Many decisions taken by departments will have a procurement implication which can impact the overall carrying cost of the decision. Here the cost includes the total cost of the goods or services produced and not simply the price that is paid for the goods and services.
In the private sector, the procurement market intelligence is viewed in the sense of a strategic function that is working to enhance the organization’s profitability. Procurement is viewed as helping to reduce raw material prices and costs, streamline processes, and in identifying better sources of supply. In short, helping to reduce the ‘bottom line’.
In point of fact, many organizations lay the importance of procurement acknowledged by having their head of procurement set down at an Executive Board level. In the public sector, the concept of a ‘bottom line’ is not well defined; there are no shareholders’ dividends to be publicly declared or paid out as profit or loss announcements.
However, there is an immense need to maximize the output, in terms of upskilling within the available funds. These funds may substantially come from public funding in the forms of student fees, grants, etc.
We are the public sector’s shareholders as students, taxpayers, or staff. This, therefore, places an inherent need that the funds provided are well dealt with in a manner that is accountable and it demonstrates both values for money and probity.
The need for transparency, openness, and non-discriminatory action is required by legislation, at higher levels of expenditure.