SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT Analysis (sometimes known as a SWOT Matrix) helps identify a company/organization’s strengths, weaknesses, opportunities, and threats. This is a method of strategic planning that primarily helps frame a company-specific business model. This business model shall focus on aligning the company’s resources and potential to the demands of the environment (composed of social, economic, legal, national, and international events) in which the company operates. A SWOT Analysis can play a significant role in analyzing an organization’s supply base. It is a great way of assessing a supplier and the factors that affect it.
Internal Factors
The internal analysis identifies the Strengths (S) and the weaknesses (W). The following are some common internal factors considered for SWOT Analysis:
- Physical resources (location, infrastructure, and equipment)
- Financial resources (funding, sources of income and investment)
- Human resources (staff, volunteers, board members, management, target population)
- Technical resources and innovation
- Past experiences, reputational factors
- Production, distribution, marketing strategies
External Factors
External forces or factors are linked either directly or indirectly to an opportunity (O) or threat (T). External factors are forces that are out of control of the company, such as the following:
- New and existing political, environmental, and economic regulations
- New and existing competitors, relationships with suppliers, vendors, and partners
- Market trends (new products, technology and shifts in target audience needs)
- Economic trends and turndowns (regional, national, and global)
- Demographics
After identifying the factors and completing the SWOT Analysis, the company can convert it into a real strategy to combat and overcome their weaknesses and threats using their strengths and opportunities.
Conclusion
A SWOT Analysis is a great way of assessing a supplier and can be done at any stage of the procurement process. It results in an on-a-page assessment that can help formulate strategies on the supplier. They can also inform the broader category strategies which the suppliers are within.
Key Takeaways
- Apply a SWOT analysis to each supplier
- Conduct regular analyses for Strategic suppliers (Quarterly) to be able to respond to any emerging opportunities or risks
- Collating competitors from the same category SWOTs to create a category view can help identify key industry issues or opportunities
