Strategic procurement is the development of a true partnership between a company and a supplier of strategic value. The arrangement is usually long-term single-source in nature and addresses not only the buying of parts, products, or services, but product design and supplier capacity. Partnering agreements allow the mutual exchange of confidential information, proprietary restrictions, non-disclosure, non-compete, certification of processes, routine audits, delivery performance, quality performance, as well as the transfer of control of a process or product.
The relationship between partners is unlike the traditional adversarial relationship between buyer and seller, where the buyer pits one supplier against another frequently during the year, focusing entirely on unit cost. Under these conditions exists a mutual distrust between parties that is counterproductive to both. For the buying company, there generally exists an unleveraged multiple supply base that results in a competitive cost disadvantage. For the seller, he is continually negotiating price reductions at a disadvantage, kept in the dark, expected to "jump through hoops" in an instance, and generally kept subservient to the buyer.
In a strategic procurement agreement both companies view each other as equal partners, assisting each other with training, technical help, and developing a full trust. The buying company involves the supplier early in the new product design cycle, allowing the supplier to bring its expertise to the table. Simultaneous engineering is routine, and cost savings are generally shared for product or process innovations.
Within the buying company, procurement is elevated to the strategic level and included in the long-term planning process. Strategic objectives such as part number reduction, supply base reduction and new strategic agreements are assigned to the senior procurement officer and the procurement group for achievement. The idea is to leverage the procurement organization talent and assets for a competitive advantage.
Market Intelligence (MI) is the information relevant to a company's markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics. Market intelligence is necessary when entering a foreign market.
Organizationally, Market Intelligence can be the name of the department that performs both the market intelligence and competitor analysis roles. Competitive Intelligence describes the broader discipline of researching, analyzing and formulating data and information from the entire competitive environment of any organization. Business Intelligence of any kind may also be their responsibility, in tandem with (or solely performed by) the Finance department, for measuring market share and setting growth targets, the Mergers & Acquisition group for exploring acquisition opportunities, the Legal department to protect the organization's assets or R&D for cross-company comparison of innovation trends and the discovery of opportunities through innovative differentiation.
The importance of Market and Competitive Intelligence
If an organization wants to be close to the market it needs to fully understand it, including the roles that the competitors and customers play there.
An answer by clear benefits:
Market and customer orientation – promote external focus
Identification of new opportunities – e.g. identify new trends before our markets and competitors
Early warning of competitor moves – enable counter measures
Minimizing investment risks – detect threats and trends early on
Better customer interaction – inherit intensified customer market view
Better market selection & positioning – understand where your offer fits and discover untapped or under-served potential
Quicker, more efficient and cost-effective information – avoid duplication of report acquisitions and expensive consultant work