supply market analysis

How to do supply market analysis well

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!