News, Culture & Society

How is market evaluation important in terms of procurement?

Market evaluation is a significant contribution to enable efficient procurement market intelligence, as the market research will further enable procurement functions of an organization. Suppose they have the right market, suppliers, and vendor information, knowing the best prices offered and comparing them with the help of software dedicated to procurement market intelligence will help the company save money and procure items that are worth every penny.

Procurement market intelligence is a tangible way of assessing the market strategically, which is an overly complex function, using one or multiple software or with the help of a procurement market intelligence service provider. There is a lot of debate about whether the market intelligence analysis is precise, as the market is a variable.

In contrast, the rate at which a company is ready to utilize its funds is almost constant. This whole debate is putting organizations into a situation where they want to trust the process and invest in it. On the other hand, they do not want to lose their investments, and they are looking for a profitable outcome.

Why Market Intelligence is the best bet to achieve procurement goals:

The MI (Market Intelligence) strategy is the most efficient way to develop strategic decisions for the business and support them. The following points will further enhance the fact as to why a company should look into investing in the market evaluation techniques to have better procurement:

Money savings: The department of procurement has goals to save money for the company, trying to find the most reasonable vendors to purchase from, right from the stationery supplies to the big-ticket items for production. Everything costs a significant amount of money, which in turn becomes the capital investment. With the help of the market evaluation via a market intelligence survey software providers/ analysis services, they will provide a benchmark for pricing, as the market survey will provide details such as the average quote price.

They also allow the company to identify certain underlying perks and alternative services of products that were not known earlier due to a lack of market studies. This technique also allows the customer to find new services that could be bundled together with the current service to bargain and negotiate a reasonable price for the products being procured.

Time-saving: Every member of the procurement team in any organization is always under constant pressure to deliver the best results. They also need to make sure the company makes a profit from saving due to procuring products at a cheaper rate than the average rate pitched in the market by the vendor/ supplier. The team certainly feels the pressure under time, and it is no hidden fact that time is money. But this can be avoided, and the stress imposed on the procurement team can be reduced with market evaluation. The survey results help them come with the best quotations to negotiate with the vendors.

Risk Reduction: There is no doubt, the entire act of procuring products is associated with its own set of risks, such as being promised a certain quality of products and getting a lousy batch delivered, the risk of coming across financially unstable vendors, upstream, and downstream chain facing interruptions, unforeseen political unease disruptions or disruptions due to a natural calamity is all part and parcel of the trade. Even with a considerable fluctuation in commodities prices, the procurement team is expected to deal with these risks, as the business has to go on. But these risks can be mitigated with the help of market evaluation and intelligence.

Credibility gains: Most procurement teams have their struggles to interact and gain credibility from their stakeholders and the management teams internally. Those teams tend to come up with many questions that are primarily targeted to make the team come up with their flaws of not doing proper back-end research. It can be avoided entirely as the tools on market intelligence will help demonstrate the expertise and values across various products, categories, and services. It will undoubtedly enable the procurement team members to arm themselves with the information and be more confident during the meetings when difficult questions about procurement are pitched. It will surely impress the top management team and give them the “go ahead” to opt for the vendors’ procurement deal.

Suppose the organization is interested in investing in market intelligence; in that case, many service providers will cater to the business’s needs and conditions. The evaluation can be done precisely to give better profit to the company.