Unit 3.4 Unit 5.

3 Key questions
Understanding Supply
 Explain the purpose and benefits of undertaking a
Markets supply market analysis
Elliot Simangunsong, Ph.D., Dip. SCM (ITC)  Set priorities for undertaking a supply market analysis
 Explain the risks and opportunities associated with
competitive and non-competitive markets.
 By combining your assessment of supply market risk
and its potential impact on your organisation,
determine which market segments best meet your
supply targets and present the best balance of risks
and opportunities

Supply Market Analysis

Assess the availability of different markets
to meet your requirements
Supply Identify the markets which represent the b
est opportunity & lowest risk for a purchase
Market
Analysis = Review of the structure, Identify new products & technologies
characteristics & trends of
Understand conditions & constraints related
a market for a particular to particular purchases
product or service

Reduce costs & risks

What is the purpose???
Identify opportunities
ITC M3:U1:1.1-3 ITC M3:U1:1.2-1
 The supply market knowledge Setting priorities for analysing
influences your decisions on: supply markets
1. …what & how much to buy?
Factors to consider : 2 3 1
 Is it a new purchase item?
?
1
? ? 3  When did you last review the market situation?
2 ? 4 ?
 How quickly are the market & technology
changing?
2. …where to buy?
 How much is being spent on the item (annual
expenditure)?
 What is the potential impact on the company if
the item’s supply targets are not met?
3. …when & how to buy?
ITC M3:U1:1.1-2 ITC M3:U2:2.1-1

Supply risk for supply targets...

The degree of difficulty or uncertainty Market drivers are factors which generate a
that you face in achieving your supply
targets because of market conditions is
? ?
competitive advantage and include abilities to:

called supply risk. ?

?
? Differentiate products &
? ? services
?
You may not know the level of Develop new products
supply risk if:

You are buying a new product Take advantage of niche

Your supply target has been raised markets
You have not looked at the market for some time and the
supply market conditions may have changed Secure manufacturing
flexibility
ITC M3:U2:2.3-2

Control of distribution
 Competition in the marketplace
Porter’s framework:
The five forces that determine the degree of competition in a market

Cost of Production 5. Threat of

new competitors
entering the market

PRICE
1. Competitive
rivalry amongst
2. Bargaining businesses 3. Bargaining
power of suppliers power of buyers

Value to the Competition &

Customer Market Factors 4. Availability of
substitute products
or services

1. Risks & opportunities in competitive mar

Competitive markets kets
In competitive markets, no individu • Competitive pricing • Suppliers may disappear or dis
al buyer or seller can influence price • Product differentiation continue the product
s or levels of business • Better quality, delivery and
support
Specific cases of markets with distorted competition:

Monopoly: One supplier is the sole seller of a product.

Oligopoly: A few suppliers offer identical or similar
products.
Monopsony: One organisation is the sole buyer of a
product.
Oligopsony: A few buyers dominate the market.
2. Risks in markets with restricted
competition
• Poor customer focus & service level
• High prices & price increases
• Lack of innovation
• Lack of leverage & flexibility
 COMPETITIVE PROFILES OF MARKETS:
Consequences for the buyer
Electricity
Note pads Delivery vans
(in many countries)
MARKET
FORCE

Competition amongst High Relatively Low Very low

suppliers
Product Low High None
differentiation
Product High Average No
Substitutability
Barriers to market Very low High Very high
entry
Low High Very High
Market Concentration INTERNET

Bargaining power of None Low None

the buyers
Competitive Market Oligopoly Monopoly
Conclusion

Segmenting means grouping together all suppliers

Existing Specialised for whom risks and opportunities are similar
market journals
studies Segment A:
suppliers of
standard
Information needed components
Your Industry
colleagues to carry out associations

Market Segmentation
Segment B:
Your Suppliers of
The specialised
suppliers
Internet components
 The Segmentation Process
1) Establish potential segmentation
variables based on your existing
supply market knowledge.

Check the reliability

2) Screen out some segments based
on your existing knowledge and Analyse & interpret
common sense.

Organise what you have collected

3) Identify the risks and opportunities
of each segment, and select the
segment(s) that best meet your
requirements.

Interactive Exercise Case Discussion

 Properly used, a computer can help you to become more
organized, work more efficiently, and accomplish many tasks.  See Google Classroom
You have been allocated a budget of Rp. 7.5 million for each
employee for buying 50 all-in-one desktop PC in total.
 What steps should you take next?
o Choose computer hardware: use computer software as an informed
decision as to what you'll need in terms of computer hardware to
properly run the programs.
o Comparison shop: Checking pricing is more meaningful if you can
compare among different retailers your desired system's cost as
opposed to the costs of each of its parts.
 Operating systems & office software are not needed, the
organisation already have the licenses.
 Nama File: "PCBuy.Nama-nama mahasiswa.docx"