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Below is an extract from an article featured in the Procurement Leaders Plus supplement, The Connected Organisation, published in partnership with Ariba, an SAP company. Subscribers can download the full supplement here.
Traditionally, procurement functions have utilised systems internally as a means of gathering intelligence about the markets they operate in, the financial state of suppliers and the price outlook of the raw materials they purchase. But they are now waking up to the greater possibilities and how they can help the business, which is bringing procurement closer to the rest of the business.
One company that has seen success in introducing a market intelligence system that draws on and manipulates information from the supply base is pharmaceutical giant GlaxoSmithKline (GSK).
Speaking to Procurement Leaders, Nicola Mifsud-Houghton, market intelligence manager at GSK, says, "The centralised market intelligence portal is set up to support production procurement. It is a self-service portal for commodity managers, buyers and procurement executives, where they can access the latest information on commodity markets and procurement strategy."
It is a fairly new tool at GSK and has been built from scratch. A development team was put together two years before roll out, spending time understanding the type of data needed to be integrated into this and where this would come from.
The system has been well received by those using it and the team has been quick to recognise its potential for the rest of the business.
"Our vision is to roll out the market intelligence capability across the whole of procurement in GSK and to couple it with internal business intelligence tools, bringing all this information together as one," said Mifsud- Houghton.
Another head of supply market intelligence at a multinational engineering firm elaborated on this company’s own system and the potential therein, saying: "Our supply market intelligence focuses on gathering information about key materials both direct and indirect which impact the business. We collect this data, analyse it and distribute it among our buying colleagues.
"We already use some of that beyond pure purchasing aspects: it is applicable also in engineering or on the sales and business planning side."
But while these systems are making their mark, there is scope for improvement and some lingering concerns over implementation costs. James Tucker, senior director, network strategy & marketing at Ariba, explains that some market intelligence systems are backward looking, utilising data that can be two or even three months old.
He adds that while this information is valuable, operating in a world that works in real-time, it is important for buyers and the business to have the most up-to-date information available.
Lee Clewley, market intelligence manager at GSK, that one of the hurdles the team had come across during implementation had been the sum of money that had to be spent on subscriptions and IT systems. He added that the system had already paid for itself and is now helping save the company a lot of money.
Despite these reservations, the value that these systems offer, the savings they can bring and the offer of closer collaboration with the rest of the business the function can enjoy are too great to be ignored any longer.
A video interview with Ariba’s VP and CMO Rachel Spasser, discussing the connected organisation: