To gain a better understanding of the situation, it’s essential to conduct a SWOT Analysis. The Procurement Classification Matrix can assist in this process. Remember that categorizing procurement products and services requires evaluating their significance to the organization based on value and risk. This categorization separates purchased items into four quadrants.
Internal strengths and weaknesses are typically derived from comprehensive data collected about the organization. This can include information on skill sets by function, professional development and training activities, facilities, the company’s reputation or standing in the community, etc. Ideally, input from external customers and suppliers provides substantiated evidence, as to weakness in particular substantiated evidence, as to weakness in particular, that can then be appropriately addressed.
External opportunities and threats are based on market trends and risk analyses. Environmental scanning might be required to assemble data on external forces. This involves collecting and analyzing external data on market forces; demographic changes; changing customer needs; competitor pricing and offerings; current and emerging technology; new taxes, laws, and regulations; and social, political, and economic conditions.
Taking advantage of opportunities can help an organization make progress towards its goals. However, if these opportunities are neglected or not developed properly, they can quickly turn into threats. Other opportunities may come from competitor actions, new products or markets, or data gathered during environmental scanning.
Threats are defined as risks that can impact a company negatively if they are not handled appropriately. External risks include unforeseen events outside the control of an organization that can diminish productivity, profits, or marketshare. Of course, there can be internal threats that arise due to a company’s actions, such as overzealous geographic expansion or excessive outsourcing.