costs?
• Do national suppliers offer more value than regional suppliers? • Does project planning provide adequate lead times for shipping of some or all of the
Unbundled product • How much leverage and cost savings does our spending provide with each group? vs. Bundled product • Can selected Vendors satisfy The State’s demand?
• Is there opportunity to improve buyer power by using other parts of the Value Chain (National Distributors)
3
Vendor Market Analysis
PROCUREMENT TRANSFORMATION INITIATIVE
• Can we develop alliances by combining different products?
• Does the supplier base have the capability to provide multiple product lines
Multiple vendors vs. • How many vendors are required to meet our demand?
• To understand the key dynamics of a particular vendor market and the competitive situation that the Vendors in this market face
• To identify key players in the market
projects needs?
• Will trade legislation and disputes restrict global vendor? • What cost savings can be captured by developing non-traditional Vendors?
Vendor market analysis is the first step of the strategic sourcing process
What is a vendor market?
• A vendor market is a group of firms that produce products that are close substitutes
Index
PROCUREMENT TRANSFORMATION INITIATIVE
Section
Overview and introduction Approach and Analysis Example Vendor Market Analysis
Page
3 6 12
1
PROCUREMENT TRANSFORMATION INITIATIVE
• To make our sourcing strategy and negotiations tactics more robust
2
PROCUREMENT TRANSFORMATION INITIATIVE
Vendor Market Analysis helps answer some of the key questions that arise when selecting sourcing strategies
Decision Point
Key Question
Global vs. National vs. Regional
• Do global vendors/national vendors exist? • If so, do the advantages of global/national vendors outweigh shipping, tariff, and vendor rep
Section
Overview and introduction Approach and Analysis Example Vendor Market Analysis
Page
3 6 12
4
PROCUREMENT TRANSFORMATION INITIATIVE
Completing a vendor market analysis involves gathering data, analyzing the information and drawing conclusions that can be applied to the sourcing strategy
Sole source
• What portion of their capacity are vendors willing to commit to us?
• What are the constraints associated with scheduling?
Lease vs. Buy
• What are the economics of leasing rather then buying some portion of total demand?
• The market (s) in which a Vendor competes
Why do we study the vendor market?
• To develop a broad understanding of the vendor Market
• To develop insight as to how the economics, business dynamics, and industry trends directly impact sourcing efforts