Use market research in procurement

As a buyer, you have certainly already heard of “market research”, which has become an integral part of the process of strategic procurement.

But what is the real situation?
According to David Hargraves, Director of Strategic Procurement for a major healthcare group:

“Market research is the process of collecting and analysing information about a company's supply markets in order to make informed and informed decisions during the purchasing process.”

According to Hargraves, the result of a market study should include the following information:

• Product/service profile:
Information concerning the classification of the product or service, the size of the market and its growth rate, the manufacturing process, and the main quality criteria are listed here.

• Cost structure:
This part identifies costs related to materials, labor, transportation, transportation, energy, energy, overhead, profit, and other component costs.

• Procurement database:
It identifies the available suppliers by type, their characteristics, and the countries where they are located.

• Market indicators:
They identify factors affecting demand and prices, product potential, and all other characteristics that determine availability and price.

• Competitive analysis:
It assesses the strengths of buyers and suppliers, alternative products and services, and other factors that affect your purchasing levers.

Conducting market research for a buyer reduces risks, reduces costs, improves decision-making, and, as Hargraves says:

“It allows you to question some of the hypotheses you have put forward. If you launch the same tender on a regular basis, or if you always focus on the same procurement area, you will always get similar results.”

Among other applications, market research for the buyer makes it possible to find new suppliers, of discover new offers from existing suppliers, and countries where you can find competent suppliers.

Hargraves says that this technique can also help you gather data regarding the financial reliability and sustainability of the supplier's activities, to establish cost models for negotiations, and to identify red flags to know when to change the source of supply.