Competitive Intelligence

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Expressing the Value of CI to Different Specialties

I am having a number of discussions with people of various functional specialties including marketing, product development, general management and R&D.

One thing that strikes me (but may not surprise you) is the certainty about competitive intelligence (most all profess to know about it and practice it) and the lack of value that they are receiving.

Okay, that sounds like an opening to me for someone that purports to know CI. So, in each discussion I give examples of potential benefits that are meant to be tailored to whatever job the other person is doing. Maybe their concept of CI and its value is limited?

I am thinking that I would like to write this down. Then, when I meet another product marketing person I could hand them something to them explaining (generically) how CI might help product marketing.

Before I go off and write a series of such articles, it occurred to me that someone may have already done this work.

Do you know of a source of short descriptions of potential CI benefits that have been written for different functional groups in a high technology company?

-- Tom Hawes
Strategically Thinking Blog
JTHawes Consulting Website

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I've come across a couple of informative articles that discuss the use of CI in Procurement and Supply Chain Management.

This article from 2007 in Supply Management discusses the use of CI in Procurement

...and this discusses the use of CI in Supply Chain Management (Supply Chain Management Review, January 2007)

Best regards,
Ari Korpinen

Thanks for the references.

-- Tom

Maybe you may like to read in detail on Value Chain Analysis.
Tom, thanks for the post which I believe poses a very important question that our profession must be able to answer if we are to remain a relevant business practice.

In some of our discussions about the SCIP 2010 programming, one of the pieces of feedback I've received from many is that they would like to see a greater emphasis on the CI customer and how we can deliver higher value and better articulate that value.

Ari, your specific examples are useful and informative. Looking at your articles here were my main take-aways for the value of CI to Supply Chain Management:
Benchmark you own SCM practices to your competitors to evaluate efficiency (cost base) and adaptability (address customer needs and supply chain disruptions)
Analyzing a supplier's cost structure will help assess how viable the prices suppliers suggest during negotiations are.
Understanding the drivers of the supplier's business may also reduce the element of surprise in a negotiation and identify potential arguments that may arise. CI could "create an early warning system on potential difficulties a supplier may have" for supplier relationship management and risk management needs.
There is a lot of pricing "folklore" that can be picked up along the way. And you can make judgments about cost advantages by finding out if companies have switched to new, low-cost sources of supply.
Finding out information about current or potential suppliers could also indirectly lead buyers to discover details about competitors, since they may have providers in common.

For other functional areas, what are some of your thoughts about the specific values that CI can deliver?
Analyzing a supplier's cost structure to assess the viability of the supplier's tender prices contains some challenges as to collecting the information in a legitimate way. Cost analysis would require e.g. investigations into the prices of the suppliers' suppliers, which form the cost components of the price in the tender proposal. So, basically, it is about "breaking up" the specification in my tender to understand the various raw materials, components and sub-assemblies of the product being procured, then tracking the prices of each of these raw materials, components and sub-assemblies, for the purpose of understanding how they affect the price in my tender.

"Understanding the drivers of the supplier's business" is needed as input in investigating how the external environment affects each of the drivers in a way that affects the supplier's costs which are channelled to the tender price.

Monitoring how competitors select suppliers could be one aspect of a supplier selection process, or part of the ongoing supplier monitoring process. It is fairly easy to collect information from public sources on supplier selection decisions of public companies. The analysis process would then need to result in an answer to the question "why" the competitor (similar to one's own organization) decided to select a specific supplier over another.
Passing on information collected from tenders to other internal departments is a bit of a touchy subject, as there typically is a representation in a confidentiality agreement (that binds the procurement organization) that the information contained in the tenders are to be used in that tendering exercise only.

Another issue is the cost efficiency of using BI in the strategic sourcing process. Under what circumstances and with what scale of activity will it become cost efficient to use BI in the sourcing process? The old "Paralysis by analysis -- Death by intuition" - dilemma revisited... Well, it depends on the commodity category, or more specifically, the importance of that category to the production of the product or service being produced by the company. The rule of thumb is: The more important the category, the more business intelligence is needed! If the variation in the commodity price between competitors is not insignificant, then more BI is needed. If the negotiation process is time-consuming, then more BI is needed, as conducting a new negotiation process because of a supplier failure would be a waste of resources. If the disruption in the manufacturing process / service delivery of the company would be significant in case of a supplier failure, then more BI is needed.

I wonder about something. If you were asked, how much could you say about the most meaningful CI activity that you have done for a company or a client? Would you be able to acknowledge publicly what you did in detail? Could you give an abstract description of your success? Or, are you bound by agreements or ethics from saying anything?

My suspicion is that in most instances we are not allowed to say much of anything about our successes. The role CI must be inferred. Many people (even within the company) may prefer to attribute the resulting advantages to some other function (particularly when the success is noticeable).

Okay, if my hunch is right, then this is a severe handicap for marketing CI. Without visible, credible success stories it is hard to convince people to try to do better at competitive intelligence.

What do you think?

See more of my thoughts on this at “Classified ultra-secret! Air Force generals only!”.

-- Tom Hawes

Strategically Thinking Blog
JTHawes Consulting Website
Lets compare it to a game of Soccer.

We are the "Mid-Fielder" ( Midfilders).

We feed the Centre Fowards ie the Decision Makers.

They get the Glory! So What?


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