How procurement teams can make smarter decisions using market intelligence

Procurement is one of the core functions of any enterprise, whether it sells tangible items, intangible ones (such as music or software), or services. Procurement falls into two categories: direct (buying the raw materials or components for finished goods) and indirect (buying anything that helps the company be productive, ranging from the pen on the desk to the laptop one is typing on, or even paper plates in the canteen.)  

For many enterprises, procurement of goods and services constitutes a large share of their spending – between 20 and 60 percent, depending on the industry. 

The ever-present challenge for procurement teams is market volatility. Prices, quality, shipping times, or even the very existence of suppliers can change suddenly, as we all learned in the last several years when Covid and conflicts in Ukraine and the Middle East put supply chain vulnerability in the spotlight.  

For example, worldwide car production dropped, and prices spiked starting in 2021, mainly due to shortages of microchips that power sophisticated features. Automakers still struggle to find reliable suppliers for specialized parts.  

However, purchasers aren’t entirely helpless. With the right information, they can spot potential changes early and plan for contingencies, such as finding other suppliers or substitute materials, or renegotiating prices or delivery dates.  

The key is the right information. What companies need is an alert system to notify them when something is happening in any corner of the world where suppliers may be based, to help them take the most productive action. 

Helpful buying recommendations drawing on trusted data sources

That alert system is contained within ignio Cognitive Procurement, a spend intelligence tool that helps enterprises gain intelligence from market insights. It frees enterprises from information silos (based only on the suppliers they currently interact with) by combining cutting-edge procurement analytics with trusted third-party data sources.  

The market intelligence embedded in ignio Cognitive Procurement provides valuable decision-making context about the financial and sustainability aspects of potential suppliers, as well as the market sentiment around them. Further, it will provide intelligent recommendations, helping buyers avoid suppliers with lower reliability or less of a track record.  

For example, it can alert users of a natural disaster, such as a hurricane, shutting down a cluster of chemical plants that produce important raw materials. Or a clothing manufacturer that has long been a retail chain’s trusted supplier may turn out to have financial problems that affect its reliability. The manufacturer may be reluctant to reveal its weakness. So the retailer would likely appreciate an external source of valid and authentic data about the manufacturer’s position. 

Avoiding silos of data

In today’s complex global economy, companies not only juggle many different sources of data, from both suppliers themselves and third-party information providers, but multiple financial and ERP applications that handle day-to-day purchases and log transactions. They often have trouble combining all these data streams into a single-pane view for convenient review and analysis.  

That’s where ignio Cognitive Procurement comes in. Its analytic functions go beyond just slicing and dicing data; users can blend their enterprise’s own internal data with niche information on suppliers into a unified view of their overall spend landscape. Then, the application’s AI-driven functionality offers helpful recommendations. Moreover, it constantly monitors and refreshes its data parameters. 

ignio Cognitive Procurement offers intelligence for these important parameters: 

• Financial and legal compliance  – Outside-in views boost visibility on how a supplier is doing financially and whether any key financial parameters put it at risk of not being able to deliver. ignio Cognitive Procurement also examines legal parameters to help determine whether a supplier has any ongoing legal compliance issues that hamper its reputation and delivery standards. 
• Sustainability  – Environmental sustainability matters to many customers, governments, nonprofits, and other interest groups. That’s why this application monitors and assesses suppliers on factors including carbon footprints, environmental compliance, labor and human practices, and more. 
• Category analysis – It can give an overview of benchmarking, supply-demand analysis, and potential to negotiate based on the leverage available because of the benchmarking price, demand, or market conditions for a desired product. 
• Supply chain view – The end-to-end process of a supply chain may be affected by issues stemming from geographical locations, geopolitics, logistics, and so on. ignio Cognitive Procurement can help determine the actual cause of disruption. That allows users to work to control the risks or look for alternatives. 
• Staying competitive from sourcing to payment – In a volatile world, businesses need every advantage to stay competitive – including the real-time market intelligence embedded in ignio Cognitive Procurement. It provides better spend visibility by blending internal and external data intelligence for a 360-degree view of spending patterns and supplier performance. Its AI-powered insights are derived through screening live transactions for the entire source-to-pay cycle, ensuring that the spend optimization goals of an enterprise are met. 
• For more details, check out this webinar on how ignio™ Cognitive Procurement can help to optimize enterprise spending.  

Written by Digitate's Partner/Program Manager Preeti Ogale