Luckily, these days, procurement professionals have commodity intelligence platforms, like Vesper, to help provide the most accurate insights. Alongside this, silent indicators have also historically been used to offer subtle cues as to where the market might be going. These indicators are sometimes easy to miss, as they might initially seem insignificant.
But if used in tandem with the right intelligence tools and data, they can be instrumental in helping procurement players stay ahead of the curve. These indicators often require careful observation and analysis to pinpoint their importance. They could include changes in supplier behavior, market price fluctuations, product quality variations, or consumer demand shifts. Essentially, these are alterations in usual behavior.
Supplier behavior changes
If usually responsive suppliers suddenly become slow to answer emails, phone calls, or requests for information, it could indicate internal issues, a change in their priorities, or a potential loss of interest in business.
Increased price fluctuations, such as unusually large or frequent prices out of step with market trends, could also point to issues with supplier sourcing, production, or financial stability. Meanwhile, minor or subtle variations in product quality could indicate compromised sourcing or production processes.
Paying attention to unexpected shipment delays, even if not explicitly stated, that can disrupt operations and indicate potential logistical challenges for the supplier, is also a good area to be mindful of. Significant variations in the number of items per order, the frequency of orders, or the types of products ordered might reflect shifts in demand or internal operational changes.
Of course, in many cases, it might not be anything to be concerned about, but if some or all of these are happening at once, it is at the very least worth checking what might be happening across your supply chain and running through your data.
Market dynamics
Significant price changes in raw materials or finished goods, even if not directly related to your specific products, can impact your procurement costs and require adjustments to your sourcing strategy.
Subtle changes in consumer behavior, such as a growing interest in sustainable products or a shift towards specific dietary preferences, might not be immediately apparent but can signal future demand trends that might require some changes to your strategy.
And keeping an eye on emerging trends in the food industry is a must. New technologies, processing techniques, or packaging innovations could offer opportunities for cost savings or improved product quality, but their relevance requires careful evaluation.
Internal operations
Changes in inventory levels, such as unusual increases or decreases, could indicate changes in demand, production inefficiencies, or potential spoilage issues.
Meanwhile, a rise in PO errors, discrepancies, or cancellations might suggest problems with data accuracy, internal processes, or supplier performance. A higher than usual number of returns or complaints about product quality, packaging, or delivery can indicate potential issues with your suppliers or internal quality control processes.
The best way to identify silent indicators is to establish a baseline and understand your typical supplier behavior, market conditions, and internal operational patterns to identify deviations, as well as monitoring key performance indicators (KPIs), such as price compliance, order cycle time, and contract compliance.
Be open to utilizing data analytics to identify trends, patterns, and outliers that indicate silent indicators and conduct regular audits of procurement processes and supplier performance.
And last but not least, make sure you and your team stay abreast of the geopolitical landscape to anticipate future changes and opportunities. This year has highlighted the tremendous impact these factors can have on the landscape.
By paying attention to these movements, food procurement professionals can proactively address potential problems, optimize their sourcing strategies, and ensure a more efficient and resilient food supply chain.
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