#procurement research

The business landscape is highly competitive, and to succeed, every business needs to ensure that it has a well-defined business plan. An important aspect of this plan is procurement, and procurement research is a critical element of this procedure.

Procurement research helps a business make sourcing highly transparent and cost-efficient,thus making reducing supply risks. The research delves deep into the various facets of procurement and provides data and insight to decision makers across the procurement lifecycle, helping them develop a strong strategy and define processes for continuous monitoring and evaluation.

The increasing significance of procurement research can be attributed to the following:

Operational Efficiency – Due to precise intelligence gathered, procurement research can direct organizational resources to key priority areas and help the organization quickly adapt to changing supply market dynamics. Procurement research can also do a “make versus buy” analysis to understand whether manufacturing or outsourcing the requirements will be more cost-efficient. It conducts a thorough analysis of associated cost and value drivers to determine this.

Effectiveness in Sourcing – Most companies aim for top quality materials at the most reasonable cost. Comprehensive procurement research gives complete details of supply landscape containing a targeted list of potential suppliers with their capabilities and prices, making the decision process easy. Procurement research can also identify the most cost-effective geographies for sourcing.

Use of Technology – Procurement research can help discover technological innovations and disruptions redefining the supply market. It can provide stakeholders with knowledge of the potential benefits of new innovations entering the market, thereby helping them upgrade their processes. Companies can decide to adopt these technologies and gain a competitive edge over others.

Risk Management – Every supply chain is exposed to a myriad of risks and procurement research can help predict some of them, helping organizations be prepared with an action plan. Moreover, it can spot warning signs and alert businesses accordingly. It helps the organization exercise caution and develop proactive strategies to deal with such events, minimizing negative impact.

Value Addition – Organizations can achieve value additions due to procurement research. Expert evaluations, timely intelligence, and insight received by the procurement team aid in designing effective strategies. Organizations are able to add value instead of simple cost-cutting. 

Armed with information and analysis, businesses can navigate difficult terrains of supply chain management. They can take informed decisions, enabling them to achieve significant cost savings, reduce supply risk, effectively manage the supply base, and add strategic value to the organization.

Procurement, which refers to the process of purchasing goods or services for various corporate activities, is essential to ensure continuity of business. It is a comprehensive process entailing selection, comparison, solicitation, quality checks, and payment processing. Snags in procurement can have a direct negative impact on business; hence, it is advisable to undertake procurement research regularly.

Research covers analyzing various factors that affect a company’s supply chain: procurement planning, standards, specifications, supplier base, competitive options, price negotiation, and inventory control. Based on the insights drawn, businesses can make informed decisions and avoid risks.

Procurement research is important for:

1. Need analysis – Incorrect estimation of business needs can affect the procurement process. Over or understatement of requirement, insufficient budgets, or impractical scheduling, any of these can create obstacles in the procurement process. Procurement research helps in ascertaining the needs accurately and understanding their relevance to the business.

2. Supplier selection – Procurement research is crucial when selecting suppliers. Options are analyzed, along with an in-depth study of quality of service, pricing, and sustainability. This helps in not just building a reliable supplier base but also identifying potential suppliers as an alternative. 

3. Supplier management – Globalization has led to the distribution of supply chains across countries and time zones. This could be a challenge during periods of uncertainty such as pandemics, geopolitical crises, or natural disasters. Timely research helps in monitoring suppliers and discerning catastrophes beforehand which is important for contingency planning.

4. Avoiding unplanned purchases – If procurement planning is not done correctly, it could lead to sudden and unplanned purchases from vendors not a part of the identified supplier base. This may leave the organization exposed to several risks: compliance risk due to an incomplete audit of vendor, financial risk as the purchases were unplanned, or the risk of low-quality goods. By gathering information before preparing the statement of requirement or selecting the vendor, unplanned purchases can be avoided.

5. Digitalization – Today, digitalization is necessary in every part of the value chain and procurement process should also embrace technology to increase efficiency. With the help of research, technologies best suited for the business and processes can be identified and implemented.

Procurement research is an important function which contributes to an organization’s overall strategy, business plan, and goal setting. It aids in streamlining the entire supply chain and facilitates innovations in procurement. Technological transformation has become an integral part of functions and processes, and procurement is no exception. Undertaking procurement research with the help of the latest technology, we can draw useful insights.

Procurement research trends will be defined by the latest technologies and skills that dominate the procurement function in the coming year.

Some of the main trends expected in procurement in 2020 are:

Machine learning techniques – Machine learning technology integrated into machines will improve data collection. It will identify and rectify data errors in systems. The updated and accurate data can be used in procurement research to draw vital insights.

IoT and device connectivity – IoT will ensure complete device connectivity and real time tracking and monitoring. It will help in getting data that procurement research can use to understand purchasing patterns, catalog content, supplier portfolios, and contract fulfillment.

Artificial intelligence – Soon most procurement systems will have minimal human intervention. Intelligent bots will carry out repetitive tasks and manage a large volume of orders. Data will be needed to implement AI accurately. Procurement research will become essential to design these programs and bots.

Risk management – Given the changing dynamics globally, risk management will be at the forefront of procurement professionals this year. Procurement research should be focused on obtaining the latest information and changes occurring in each industry as they will impact the world economies. The research will ensure that risk management is one of the main agendas to prepare the organization for the unexpected.

Supplier relationship – Collaboration with suppliers is critical and procurement research will aid in gaining important data to facilitate this. Details pertaining to supplier’s profiles, orders, economic situations will help organizations in devising strategies for forging successful relationships. Building a strong network of suppliers will be the main trend for procurement this year.

Read about the risks involved in the supply chain and how to deal with them. Aranca is one of the best procurement research companies in the world. Aranca helps you make a fearless decision.