3. A market exists where:
There are two or more parties
Each party has something of value to the
other
Each party can communicate & deliver
Each party is free to accept or reject an
offer
4. 1. …what & how much to buy?
2. …where to buy?
3. …when & how to buy?
The supply market influences decisions on:
5. Supply Market Analysis
Review of the structure, characteristics &
trends of a market for a particular product
or service
Supply
Market
Analysis =
6. Assess the ability of different markets to meet requirements
Identify the markets which represent the best opportunity & lowest
risk for a purchase
Identify new products & technologies
Understand conditions & constraints related to particular purchases
Reduce costs & risks
Identify opportunities
7. Factors to consider :
Is it a new purchase item?
When did you last review the market situation?
How quickly are the market & technology changing?
How much is being spent on the item (annual expenditure)?
What is the potential impact on the company if the item’s supply
targets are not met?
8. The supply positioning model
80% of items = 20% of value 20% of items = 80% of value
M
H
N
Expenditure
Impact
L
Max.Min.
Routine
Critical
Leverage
Bottleneck
9. The degree of difficulty or
uncertainty that you face in achieving
your supply targets because of market
conditions is called supply risk.
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10. I. Prepare for a
supply market
analysis
III. Forecast market
developments
IV. Understanding
what drives the
market
V. Assess price
VI. Segment the
supply market
VII. Screen out less
relevant segments
II. Assess the
degree and effects
of competition
11. • What are your objectives?
• How much time do you have?
• What happens if you don’t do it?
• What information do you have?
12. • Factors influencing the DEGREE of
competition
• Risks & opportunities in markets with
different degrees of competition
14. • Differentiate products &
services
• Develop new products
• Take advantage of niche
markets
• Secure manufacturing flexibility
• Control of distribution channels
Market drivers are factors which generate a competitive advantage and
include abilities to:
16. Segment when the market is sufficiently
competitive to make it worthwhile
Segmenting means grouping together all suppliers
for whom risks and opportunities are similar
Supply Market Segment
17. • Geographic location
• Technology
• Supply channel Different segments
represent DIFFERENT
risks & opportunities!!
18. Analysing each segment takes time!
Don’t waste time on segments which are unlikely to be useful!
Don’t segment:
• When there is only one supplier or one segment is not any
different from another (in terms of risk & opportunity)
• Where certain countries, technologies or supply channels are
not accessible to you
(e.g., costs of transport is too high, you can’t use a certain
technology, the quantities you require are not big enough to
buy directly from manufacturers.)
19. I. Identify the types
of supply risks &
opportunities of
different segments
III. Further research
the risks &
opportunities related
to these events
IV. Build scenarios
to assess the extent
of the risks &
opportunities
V. Identify which
supply targets are
affected by these
risks & opportunities
VI. Determine how
much the risks &
opportunities may
affect your targets
VIII. Continue to
monitor supply
market risks &
opportunities
VII. Select the
segment(s) with the
best balance of risks
& opportunities
II. Identify and
screen the relevant
events in the
segments
20. I. Identify the types
of supply risks &
opportunities of
different segments
M3:U4:4.2-2
22. Political, legal and socio-cultural factors
P Factors to consider
Political stability Labour relations
The state of the
relationships between
governments
Threat of war
Legal framework for
business
Environment, ethics and
corruption
Culture, religion, and
Language
Time zones
23. Outbound logistics
Factors to consider How they can impact upon supply
ITC
O Factors to consider
Logistics Insurance services
Transportation
infrastructure
Risk of pilferage
Documentation
requirements
Availability of inspection
and Testing Service
25. Key inputs to the
supply market
Factors to consider
Raw materials and
components
Labour
K
steel
26. Economic & infra- structure factors
E
Factors to consider
The Government's Business
Development Policies
Finance and Banking
Foreign Trade Policy and
Regulations
Basic Infrastructures
Level of Globalization and
export trends
27. Technology factors
Factors to consider
TLevel of Technological Innovations
Choice of Technology
Product Life Cycle
Maturity of Technology
Complexity of Technology
Ease of Manufacturability
Cost of Technology and its use
Organization’s experience with the
technology
Technical Suitability and Adaptability
28. Start with your own knowledge
& common sense...
Risk
II. Identify and
screen the relevant
events in the
segments
Oppor-
tunity
29. Review information
sources available to you
Analyse the information you collect
Select the events that represent
significant risks or opportunities
III. Further research
the risks &
opportunities related
to these events
34. Monitoring of supply risks &
opportunities - when to do it?
You are waiting to take a supply decision
You have taken a decision, but wish to keep
backup options under consideration
You are buying from a supply market that is
relatively risky
36. • Specialised publishing houses
• Specialised newspapers & journals
• Chambers of commerce & trade support bodies
• Specialised trade & industry associations
• National purchasing & supply management
associations
37. • Official foreign trade representatives
• Various international organisations
• Your current suppliers (watch out for biased
information)
• Other buyers
• Service organisations (e.g., freight forwarders &
banks)
• Fairs and exhibitions
38. • Consultancy firms
• Universities & local research organisations
• Your own company, purchasing
department/staff, marketing department,
production/engineers…
40. Classify the information so that it can be
easily found
Set up a small reference ”library” (a couple of
bookshelves can be enough)
Subscribe to key sources
Get an Internet connection….
ITC
