Procurement Intelligence and Its Benefits

by Procurement Freelancers Team

Procurement is the heart of a business. Without procurement, you simply cannot run a business. But what exactly do we mean by the term ‘procurement’? Well, it is the process of obtaining or sourcing goods and services for the business. Wait, the entire process is not that simple as it may sound while going through the lines. The quality of goods and services that are being sourced plays a critical part in the process. Verifying the genuineness of the services and goods being sourced is necessary. Critical level analysis to judge the condition of the supply market of a business holds the key to success. This is where the concept of procurement intelligence appears in the scene.

A closer look at procurement intelligence

Procurement intelligence is the concept of collecting information about a business’s supply market and then analyzing it to ensure accuracy part. See, before taking any procurement decision, it is necessary to understand the legitimacy of the supply sourcing market. Reputed procurement consultants always analyze the supply chain markets to ensure a better sourcing process. It also helps a lot during the category management process.

Areas being focused at

The common areas that procurement intelligence primarily focuses on are listed:

  • Commodity Profile
  • Cost Structure
  • Supply Base Profile
  • Market Indicators
  • Competitive Analysis

Commodity Profile

This section holds info about the services and products and classifies them according to the demands and supply market. Additionally, it also reflects on the overall market growth rate, the market size, critical-to-quality issues, and the manufacturing process. A USA procurement expert will focus steeply on these areas to judge the present supply chain market condition.

Cost Structure

This area deals with cost identification associated with labor expenses, material cost (both purchase and handling), overhead cost, profitability, energy expenses, and transportation costs to name a few. In other words, scrutinizing the areas of expenses and measuring them against the profitability is necessary and procurement experts work hard towards identifying the scopes accordingly. Efforts are given to lower the cost structure without a reduction in the quality, delivery time, etc.

Supply Base Profile

One of the major responsibilities of procurement consultants is to identify the supply base profiles carefully. It is necessary to locate the best available suppliers, their country of origin, other parts of the world where they might be located, and most certainly, their specifications and characteristics.

Market Indicators

Here, consultants try to identify the demands of the supply chain and measure them accordingly. Also, comparing demands with pricing is carried out along with a focus on capacity utilization and every other aspect that has a direct or indirect connection to price and material availability.

Competitive Analysis

Competitive analysis is carried out to assess the position of the buyer and supplier in the market. It also assesses options that best act as substitutes against specific services and products. In other words, competitive analysis is necessary to assess every factor that plays a direct or indirect influence on the purchase process.

The major benefits of procurement intelligence

A USA procurement expert will find the concept of procurement intelligence highly beneficial because of the following factors:

  • Reduced scopes of risks
  • Better chances of savings
  • Many improvised decision-making opportunities
  • Better scopes in identifying new suppliers
  • Exploring the capabilities of suppliers (new and existing)
  • Locating geographical areas (local and international) for figuring out new suppliers
  • Collecting data and info on the business continuity and financial viability of the supplier
  • Developing cost models that certainly benefits during the time of negotiations
  • Detecting early warning signs in case of changes taking place in the supply market

How procurement intelligence helps to develop a positive relationship with the suppliers

Professionals managing the procurement section of a business must ensure they create a positive relationship with the suppliers. It helps in improving the business operations to a greater extent. A positive relationship with strategic suppliers certainly helps a business move forward in the steep competition and makes a positive difference in the outcome. The concept of procurement intelligence makes it easier for companies to manage divestitures, acquisitions, changes, operational factors, customer profit, and loss factors. All these have some role to play when measuring the ability of the supplier to deliver as per the demand. Moreover, if businesses are on the verge of appointing new suppliers, the concept of procurement intelligence certainly helps in the search process.


Procurement intelligence helps to gain better insight into a potential supplier, its business perspective, approaches, and overall product quality and delivery management. So naturally, businesses benefit a lot through better information coverage regarding new suppliers. This helps the businesses compare different suppliers before appointing a new one for their requirements. It also allows businesses the opportunity to play negotiation games in a better way.

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