Welcome to Supply Market Analysis. We have briefly discussed supply market analysis in the Strategic Sourcing course and we also discussed it in Supplier Management, in particular about how you seek suppliers. Well, part of that discussion, we highlighted a few of these things, but we're now going to take a deeper dive into looking at actual supply markets that you would choose suppliers from. So that's what this particular course is about. As I always do, let me give you my expectations for you. Your learning objectives for Supply Market Analysis, it's going to be over a three-week period. With this one, we can go a little deeper than we have in other courses that we've taken in the past. We need you to learn to understand various tools and techniques to evaluate supply markets. There's three ways we're going to look at it. In a macro level, we're going to give you a tool called PESTLE. I think you keep seeing that before in Strategic Sourcing. We're going to talk about some tactical issues where we're just going to take a look at the industry, things such as supply market segmentation, 5-forces analysis, supply chain mapping. That also, supply chain mapping will be useful in risk management that we mentioned in the previous course. Lastly, we'll get down to the operational or supplier level. This is where you're choosing suppliers. So we're going to go through all three of these, one week each in each one of these segments. So as I said, this is over a three-week period, macro level, industry level, supplier level. Here's where we're going to look at it. We're going to start first looking at a macro level, standing back from a very strategic standpoint is what does the market look like? I'm going to take it a little bit step lower, where we're going to say, "Okay, we know what the overall market looks like. What about what this industry that we're going to choose a supplier from?" We call that the tactical level. Then lastly, we're going to go into a lot of detail into a supplier level we finally pick the suppliers. So this is Week 1. Let's go ahead and get started. We're going to talk again about PESTLE, I'm going to go through that in a minute. But basically, it's a strategic tool for trying to understand supply market growth or decline, business position, potential direction, and what's going on from a very strategic level. You've seen this a little bit before in Strategic Sourcing, but let's go through it again and we're going to go a little deeper dive this time. So this is what PESTLE stands for: P is for political, E is for economic, S is for social, T is for technological, L is for legal, and E is for ethical or environmental. Actually, over the years, they've combined that both for ethical and environmental. There's a lot of factors we're going to analyze, trying to stand back and look at a supply market in particular. So let's go through this. So the first one is political, that's the P in PESTLE. We look at things like government policy, political stability, taxes, supplier regulations, globe trade agreements, and any other restrictions around it. Economic, we're going to look at things like exchange rates, globalization, economic growth or decline, inflation, interest rates, cost of living, labor, and consumer spending habits. Social, next category. We're going to look at consumer trends, fashions, consumer buying habits, lifestyle factors, career attitudes, work-life balance, and population demographics. Technology, we're going to take a look at automation, innovation, disruptive technologies, social networking, upgrades, robotics, artificial intelligence, and security. Legal is the next one, is there any laws, any common laws, labor laws that might affect the overall strategy, health and safety regulations. Then the last one is environmental, sometimes they also add ethical in here, but just as an example, this would be environmental restrictions imposed in-country, sustainable resources, corporate social responsibility, ethical sourcing, we talked about ethics but this expands a bit broader term of ethics, transportation, procurement, and supply chain management. So those are the key categories we're going to go through. I went through them relatively quickly. If you'd like, you can come back and review this list. Let's take one example. So here's just the first two, political and economic. You can use these factors that I referenced before to use as a judge. You say, "Well, how might these factors affect this particular supply market?" Then the last thing, with the circle around it, basically it says what's the impact on procurement or sourcing, if any, maybe there's none, maybe there's three or four. But at least, it forces you to go through this from a very strategic level. So I would recommend the way you approach this is that you can do this with your team. It's better to have a group of people, maybe your cross-functional team, walk your way through this very strategic tool and try to determine how that equates to the supply market that you're looking at getting suppliers out of. What are some key takeaways on this macro/PESTLE analysis? Well, before you start jumping in trying to identify potential suppliers, I think it's important just to take a step back and say, "What is the overall market look like from a strategic perspective?" I think it's a pretty easy thing to do. You can use this tool, get a bunch of people in the room, and I think it gets a very good output in probably an hour or so. Certainly, it might be a couple of follow-ups, but this is a very simple tool to use. This should provide you with potential opportunities, potential threats, implications, and particularly if you're going to brand new supply market area you're not familiar with, this is very critical to your success. So that ends Week 1.
