Planning

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Planning

• 6. Purchasing Intelligence and market research

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Program

• Why purchasing market research?
• Purchasing market research definition
• How to structure purchasing market research
• Subjects of purchasing market research
• Purchasing market research and information
  technology
• Organizing for purchasing market research

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Why purchasing market research?

• Continuing technological developments Should a
  company develop new technologies itself or buy
  them?
• Supply market dynamics International supply and
  demand are constantly changing due to changes in
  business cycles, mergers and acquisitions etc..
• Changes in European economies Changes in
  international labour costs and productivity may
  lead to different sourcing patterns by large
  companies.
• Monetary developments High inflation in some
  countries, large governmental budget deficits,
  rapidly changing currency exchange rates may
  require action from buyers

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Purchasing market research definition

• Fearon (1976) defines purchasing market research
  as
• Systematic gathering, classifying and analyzing
  data considering all relevant factors that
  influence the procurement of goods and services
  for the purpose of meeting present and future
  company requirements in such a way that they
  contribute to an optimal return.

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How to structure market research

• Determine objectives
• What exactly is the problem to be solved? What
  information is desired? How accurate does the
  information have to be?
• Cost-benefits analysis
• What will be the costs of the research? How many
  hours are required?
• Feasibility study
• What information is already available? The next
  step is only taken when the required information
  is unavailable in the form of publications or
  statistics.

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How to structure market research

• Design of research plan
• Specific action is sometimes needed to obtain
  information, e.g. auditing a supplier. A detailed
  project plan is needed to prepare for research.
• Execution of research activities
• In this stage it is important to follow the
  project plan prepared earlier.
• Preparing research report and evaluationWhen the
  research is finished a report has to be prepared-
  this has to contain the assignment, as well as
  the obtained results.

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How to structure market research
Evaluation
Determine objectives
Prepare research report
A stepwise approach
Cost-benefit analysis
Data analysis
Feasibility study
Data collection
What?
Desk research
Execution of research activities
Design of research activities
Where?
Field research
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How to structure market research

• Desk research versus Field research
• Desk research the gathering, analysis and
  interpretation of data
• that serve the research assignment, but which
  have already been
• gathered by others (e.g. internet search).
• Field research the gathering, analysis and
  interpretation of
• information that cannot be obtained by desk
  research. It tries to track
• down new information visits to industrial
  exhibitions and suppliers are
• examples of field research methods

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How to structure market research
Some of the most important e-marketplaces listed
per industry

• Automotive
• www.covisint.com
• www.supplyon.com
• Aviation
• www.aeroxchange.com
• www.b2b-aero.com
• www.exostar.com
• Building and construction
• www.bravobuild.it
• www.edilportale.it
• www.citadon.com
• Chemicals
• www.elemica.com
• www.chemconnect.com

• Healthcare and Pharmaceutical
• www.ghx.com
• Retail and consumer goods
• www.gnx.com
• www.wwre.com
• Transportation and Logistics
• www.transcore.com
• Energy and fuels
• www.eutilia.com
• www.traderanger.com
• Food and beverage
• www.transore.com
• www.cpgmarket.com

This list was taken from e-market services
(2003). The e-market places may have
undergone Significant changes since then.
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Subjects of purchasing market research

• Fearon (1976) distinguishes 3 areas of
  investigation
• Materials, goods and services aims at realizing
  savings or at reducing purchasing related costs
• Suppliers is concerned with obtaining specific
  information with regard to the suppliers
  financial performance, capabilities, management,
  processes,systems.
• Systems and procedures a good purchasing
  information system is of great importance. ICT
  offers great possibilities but it has to be
  guided on the basis of buyers needs.

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Subjects of purchasing market research

• Another distinction
• Macro-economic research refers to the general
  economic environment and focuses on factors that
  can influence the future balance between supply
  and demand.
• Meso-economic research focuses on specific
  sectors of industry.
• Micro-economic research focuses on assessing
  strengths and weaknesses of individual suppliers
  and products.

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Three areas of purchasing market research.
Macro-economic research
Meso-economic research
Micro-economic research
BASF
Ford
Europe
Steel
Chrysler
Shell
Bayer
GM
Automotive industry
e.g. Chemical industry
Chemical industry
US
US
Japan
adapted from Faes and de Weerd, 1983
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Main parameters to be addressed in purchasing
market research
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Purchasing market research and information
technology

• Companies are discovering the many ways in which
  ICT may support
• their purchasing operations and strategies. Some
  examples
• Companys like Grasso, manufacturer of industrial
  cooling and heating equipment and part of a large
  German group with business units around the
  world, have installed a purchasing intranet
  within three months enabling exchange of product,
  supplier and contract information
• Data suppliers like Yellow Pages, ABC have now
  available through their websites vast supplier
  bases covering supplier addresses in all major EC
  countries enabling buyers to conduct market
  surveys in short time.
• Sony uses its Purchasing website to attract new
  suppliers for certain commodities.
• Companies like FedEx, DHL, UPS provide linkages
  through the Internet which enable companies to
  keep track of their deliveries.

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Introduction of purchasing market research

• Fearon 1976 mentions 3 methods of establishing
  purchasing market
• research
• Create a staff department
• Locate all purchasing market research activities
  in a separate department or section. Advantage
  research can be allocated to specialist
  researcher.
• Market research conducted by the buyer
• Advantages research only done on issues which
  buyers consider relevant and this enlarges their
  involvement Disadvantages buyers lack of time
  to do the research systematically and the lack of
  knowledge of market research techniques.
• Work with research teams
• Compromise solution ad hoc research teams
  consisting of buyers and researchers.