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SUPPLY MARKET ANALYSIS - Coggle Diagram

- - - - Threats
        
        Can constrain the Procurement Function
        
        Be a source of brand damage and customer dissatisfaction
        
        Requiring intense risk mitigation strategies
      - Opportunities
        
        Can be a source of Procurement Function enhancement and competitive advantage
    - - Strengths
        
        Procurement Function core
        competencies or capabilities that are executed well
        
        They can be a source of strategic alignment and
        competitive advantage
      - Weaknesses
        
        Procurement Function disadvantages that exist
  - - - shows how quickly inventory is being sold. The worse the ratio means one of two things
        
        Either they have inventory that they need to sell, which provides leverage for the negotiation, or they have significant excess or obsolete inventory that they have not written down
    - - shows how much in assets were required to generate sales
        
        The higher this ratio the more their price will be heavilyvinfluenced by the need to depreciate those assetsvwhich are fixed costs
    - - describe how capital intense a Business is
        
        If a Supplier has a lower ratio that the best in class Supplier you would want to understand why
    - - The more efficient a supplier is in doing this the less likely they may be to rush to discount to make the sale as they may not need the cash to support current liabilities
    - - a sign if the indebtedness in comparison to what was invested in the company by its owners
        
        The higher the ratio the less the owners have at risk.
    - - measures how much of the money to generate sales is through suppliers
        
        . This can be useful in negotiating payment terms or The ratio can also be an indicator of health of the subcontractor relationships or potential problems with Subcontractors
    - - tells how much a company relies on sales of inventory to meet debt
        
        The more they need to sell inventory to meet their debt, the more they should need your business which provides leverage in the negotiation.
    - - measure the efficiency of the supplier
        
        It also tell you the average profit margin they have been making for use in negotiating the type of profit margin on your business.
    - - ) measures the net worth of the company
        
        . The small the net worth and the larger the liabilities the greater the risk in dealing with the Supplier
    - - indicates how profitable the supplier is based upon the invested assets.
    - - shows how much safety they have in meeting current liabilities
        
        A ratio of one or less means the Supplier has a need for cash.
    - - shows how profitable a company is based on the money invested into the Supplier
    - - show the dollars of liquid assets available to cover current liabilities
        
        A ration of 1 or less means the Supplier has a need for cash.
    - - provides the average number of days before payment is made
- - - - Is a determinant of the performance of an economy directlyimpact on a company
      - Includes inflation rate, interest rate, exchange rate, et
      - Influencing a consumer's purchasing power and changing supply/demand patterns
    - - All factors affecting the surrounding environment
      - Not limited to climate, weather, geographical location
    - - Thorough examination of the social environment of the market
      - Assess determinants such as cultural trends, demographics, population analysis, etc.
    - - Determine the extent to which a government can influence
      - Including tax policy, financial policy, trade tariff, etc
    - - Innovations in technology that can affect industry and market performance
      - Automation, research and development and the number of technologies
    - - Consumer law, safety standards, labor law, etc.
      - Have both external and internal sides
- - - - Risks: Bottlenecks, shortage of supply etc
      - Potentials: Optimization of workfolow and cost etc
  - - - Drivers/Influencing factors
        
        Buyer information
        
        Low impact on quality/perfomance
        
        Buyer volume
        
        Buyers network
        
        Buyer concentration
        
        Share of supplier sale with us
      - The higher bargaining power of buyer the better for the them (high leverage)
    - - Drivers/Influencing factors
        
        How is the price difference between the products and substitudes
        
        Degree of standardization of the commodity
        
        Switching costs from one to another commodity
      - The more substitudes the better for them (play the market)
    - - Drivers/Influencing factors
        
        Government policy
        
        Access to distribution chanels
        
        Patents
        
        Brand identity
        
        Capital requirements
        
        Switching cost
        
        Capital
      - The lower the entry barriers the better for the buyer (threat of competition)
    - - Drivers/Influencing factors
        
        Of supplier
        
        Degree of competition amongst supplier
        
        Of substitude
        
        High switching cost
        
        Supplier = key client
        
        Unique good which is important for the buyer
      - The low Bargaining Power of Suppliers the better for the buyer (high leverage)
    - - Drivers/Influencing factors
        
        Many or equally strong competitor
        
        Low product diffrentiation
        
        Market growth
        
        Low switching costs
        
        Small capacity growth
        
        High exit barriers
      - The higher the intensity of rivalty the better for buyers