Tim Minahan over at Supply Excellence posted the second part of our interview this morning in a piece entitled Supply Market Assessment 101.
I thought that I’d save a few tidbits on the subject for this blog. Here is a laundry list of just a few of the many things to consider when assessing a supply market:
- Role of government (potential sanctions, tariffs)
- Logistical risks (port closures, customs delays)
- Dependence on favorable weather
- Likelihood of being a terrorist target
- Availability of skilled labor if demand increases
- History of manufacturer recalls
- Changes in dependent demand from unrelated industries (e.g., more titanium needed to build more airplanes)
- Probability of natural disasters (e.g., hurricanes in Florida, earthquakes in California, blizzards in the Northeast US)
One of the classic models that generalizes all of the factors involved in assessing a supply market is called Porter’s Five Forces. Porter’s Five Forces, and how purchasing professionals should use the model, is taught in detail in our online course “Savings Strategy Development.”
Kudos go to Tim for allowing me to address this issue for his readers.