Supply Market Analysis: A Case Study Example

Context

This case study is based on practical implementation guidance shared during Health Procurement Africa’s (HPA) Ask the Expert webinar on supply market analysis. The session presented applied approaches from Kenya and Nigeria, delivered by HPA procurement experts, illustrating how public-sector health procurement teams can undertake supply market analysis.

Watch the full Ask The Expert webinar recording here.

Introduction

Supply market analysis (SMA) is the structured research and evaluation of a supply market to inform sourcing strategy, reduce supply risk, and achieve better value for money. It supports evidence-based decisions by improving understanding of supplier capabilities, market dynamics, pricing drivers, and the relative balance of power between buyers and suppliers.

The webinar emphasised that SMA should be forward-looking and treated as an ongoing process of scanning and updating market intelligence, rather than a one-off ‘rear view mirror’ exercise.

The Supply Market Analysis Framework

The webinar described SMA as a practical process that: (1) defines the scope and structure of the supply market, (2) gathers market intelligence using strategic tools, and (3) translates findings into sourcing and risk mitigation actions.

An early step is to clarify the supply market’s scope (local, regional, national, international) and the degree of supplier concentration (e.g., monopoly, oligopoly, or competitive markets). This helps set realistic expectations for competition and leverage.

	Few Suppliers (Monopoly/Oligopoly)	Many Suppliers (Competitive Market)
Local/Regional Market	Higher supply risk; limited alternatives; switching constraints may be significant.	More sourcing options; competition may support better terms and responsiveness.
International Market	Global ‘big-ticket’ supply may concentrate power with large suppliers; barriers to entry/substitution can be high.	Broader supplier base; differentiation remains common; buyer must manage logistics, FX, and compliance risks.

The webinar also noted that ‘perfect competition’ is an academic construct; even where many suppliers exist, products and services are often differentiated and information is imperfect.

Developing the Supply Market Analysis

A structured approach involves three stages: market definition and preparation, analysis of market dynamics and risks, and translation of findings into sourcing strategy and documentation.

Data Preparation

Preparation starts by clarifying the procurement need and confirming the level of depth required. The Kenyan example highlighted that the depth of SMA should be proportionate to procurement value and complexity. Data and inputs may include: market scope, key suppliers and ownership, supplier capabilities, lead times, logistics constraints, pricing mechanisms, and key customer segments competing for supply.
The webinar emphasised that SMA is owned by the procurement unit, but should be completed with internal stakeholders because procurement supports users and requires subject matter input to define requirements and interpret market realities.

Objective Assessment

The webinar recommended using structured tools together (rather than in isolation) to build a robust picture of the supply market. Key tools referenced were STEEPLE/PESTLE (macro factors), Porter’s Five Forces (market forces and competitive dynamics), and SWOT (summary of opportunities/threats aligned to internal strengths/weaknesses).

Market Structure and Dynamics

Factor	High	Medium	Low
Supplier concentration	Monopoly or tight oligopoly	Limited supplier set	Many suppliers available
Barriers to entry	Patents/capital/regulation create strong barriers	Some barriers; partial entry possible	Low barriers to entry
Barriers to substitution	Switching is difficult/costly; closed systems common	Some substitution possible with effort	Substitutes readily available
Competitive rivalry	Limited; suppliers may set terms	Moderate rivalry	High rivalry; suppliers compete for business

Pricing, Risk and Compliance Drivers

Factor	High	Medium	Low
Price driver exposure	FX, energy, logistics, and inflation strongly influence total cost	Some exposure; partially manageable	Limited exposure; stable pricing
Supply continuity risk	Lead time/availability uncertain; disruption likely impacts services	Manageable disruption	Low disruption risk
Quality/counterfeit risk	Significant risk without strong verification/certification	Moderate risk	Low risk with established standards
Eligibility/compliance constraints	Strict regulatory/technical eligibility limits supplier options	Some constraints	Minimal constraints

Case Application: Public-Sector Health Procurement

Kenya Context

The Kenyan case emphasised SMA as a formal procurement function recognised in the Public Procurement and Asset Disposal Act (PPADA) and regulations. SMA was described as supporting: defining requirements, budgeting, choosing procurement methods, procurement planning, bid evaluation, contract amendments, and market sounding for major procurements.
A practical procedure was described: identify the need for SMA, meet internal stakeholders to confirm category positioning and agree depth, complete tools (such as PESTLE, Five Forces, and SWOT), summarise findings with stakeholders, file within the sourcing plan, and then review and update at an appropriate frequency.

Nigeria Context

The Nigerian case emphasised SMA as a planning-stage requirement under public procurement practice, supporting annual procurement planning and cost estimation through market and statistical surveys. It highlighted the importance of separating what is available in the market from what is eligible to procure, including regulatory and corporate compliance requirements.

A worked example discussed medical laboratory systems and the importance of total cost of ownership (TCO). The webinar noted that focusing only on the initial purchase price can mask major operating costs such as reagents, consumables, maintenance, energy, and service responsiveness. It contrasted risks of ‘closed systems’ (lock-in and switching constraints) with approaches that improve continuity of supply and service delivery.

Governance and Supplier Management

Activity	Responsible Parties (as described in the webinar)
Define scope and depth of SMA	Procurement lead with internal stakeholders; proportionate to value/complexity
Conduct analysis using tools	Procurement unit (owned by procurement) with subject matter input
Document findings in sourcing plan	Procurement unit; shared with stakeholders and used to support approvals
Maintain compliance/eligibility checks	Procurement with regulatory/technical stakeholders as relevant

Implementation Challenges

Challenges discussed included limited resources (skills, manpower, logistics and financing), prioritisation pressures, lack of technology/tools, and rapidly changing product life cycles and market demand. The webinar noted that the effort invested in SMA is typically outweighed by gains from improved value for money and reduced risk when applied proportionately to high-value or complex procurements.

Dynamic Review

The webinar emphasised SMA as a continuous process. Procurement teams should review and update market intelligence as the market evolves, including supplier restructuring (e.g., mergers and acquisitions), changes in supplier priorities, new entrants, and emerging products and services.

Conclusion

This case study demonstrates how supply market analysis supports better procurement decisions in public-sector healthcare by clarifying market scope and structure, using strategic tools to understand dynamics and risks, and applying findings to budgeting, planning, method selection, and sourcing strategy. By maintaining updated market intelligence and applying a proportionate approach, procurement teams can improve value for money and strengthen continuity of supply.

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