How to Avoid Business Risks With Procurement Research and Market Intelligence

Procurement is a key strategic function that should be aligned with a company’s objectives. In a modern global business where vendors and partners are situated beyond international borders, conducting comprehensive research and gathering market intelligence are essential.

Procurement research involves gathering and analyzing data to collect invaluable inputs that will facilitate a smooth procurement process and alleviate any risks. It helps in creating a strong procurement strategy so that organizations can be prepared to face any future challenges.

The procurement process is plagued with various types of risks such as potential fraud as well as cost, quality, and delivery risks. Procurement research can aid in mitigating such risks by sharing important information related to suppliers and the supply chain in advance. This allows the company to avoid unforeseen events and be ready with contingency plans.

Procurement research assists in sharing critical information that help avoid risk:

• Supplier selection – Procurement research entails an in-depth analysis of available suppliers to shortlist and finalize ideal options. This makes sure that the suppliers have a credible reputation, are known for their quality, and have a presence in diverse geographical locations.

• Supplier management – Market intelligence gathered through procurement research contains a detailed analysis of each supplier, along with their cost, quality, and timeline adherence mentioned. Even their financial stability and business acumen are verified to ensure there is no probability of a sudden bankruptcy that could negatively impact the business.

• Inaccurate data – Inaccurate data can lead to over- or under-purchasing, both of which are expensive mistakes for a business. Procurement research can look at the historical data of a company’s purchases and cross-check it against the business’ procurement plan.

• Supply chain disruption – The current pandemic has shown how global businesses are vulnerable and their business continuity threatened if the regions in which their suppliers are present are hit by a crisis. In today's business world, many manufacturers have vendors in various geographical locations; therefore, it is crucial for them to be aware of any news affecting those regions.

Risk management is a highly complex process and an important part of the organizational and procurement strategy. Procurement risks are similar to other risks that a business may face. Hence, procurement strategies should include risk management and contingency plans.

Estimating, controlling, and mitigating various risks associated with procurement operations require in-depth data, information, and analysis. Procurement research is a key function of the procurement strategy that provides the required data mentioned above in a timely and systematic manner and helps to steer the business toward success.