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Market conditions are comprised of the current trends or recent events going on in the marketplace. These include capacity issues, supplier consolidation or deconsolidation efforts, new regulatory changes, natural disasters, and political or socio‐economic changes. Often, these conditions can play a major role in the results of a Strategic Sourcing initiative.

Having a firm understanding of ongoing market conditions will help you solicit proposals from suppliers at the most advantageous time for your organization. For example, if markets are currently unstable or fluctuating dramatically, it is probably not the best time to request a price decrease from a current supplier. In addition, if product is scarce and capacity is unavailable, alternate suppliers are going to be less likely to provide you with a low price. Instead they may focus on ensuring supply for existing customers.

You would not, for example, want to approach your suppliers for discounts on oil‐based products during hurricane season because that is when oil prices typically peak. You also would not want to go to market for electricity during the summer, when electricity consumption is normally at its highest, keeping prices high.

Conversely, periods of excess supply are optimal for reaching out to your suppliers and signing long‐term pricing contracts.