The aim of supply market analysis is to feed into category planning and sourcing strategy development. There are a number of tools that you can use to do the analysis but at the end of the day you should be looking to show at a minimum:
The position of the suppliers in the market relative to each other
- The potential for change in the supply market (and causes)
- The balance of power between suppliers and customers
An in depth supply market analysis may make use of the following models which are useful to structure the information:
- Porter’s 5 forces
- PESTEL analysis
- SWOT Analysis
- Kraljic Portfolio Purchasing Model
Porter’s 5 forces are:
1. Competition / rivalry within the industry
2. Barriers to entry into the industry
3. Impact / power of suppliers in the industry
4. Impact / power of customers in the industry
5. Threat of substitute products
PESTEL analyses the following six factors:
P – Political
E – Economic
S – Social
T – Technological
E – Environmental
L – Legal
SWOT analyses the following four factors (from a business perspective):
S – Strengths
W – Weaknesses
O – Opportunities
T – Threats
Kraljic Portfolio Purchasing model involves positioning (potentially using inputs from above models) a commodity / service based on:
Supplier risk & complexity
Category business impact
We are developing a template which will include examples of each of the above types of analysis to help you. Stay tuned!