Analytics should be a component of any procurement solution – and basically every area of a company. While most companies invest in technologies to automate processes, they need to adopt an approach that considers data analysis as the driving force behind optimizing these same processes.
These tools extract information from ERP systems, eProcurement, business cards and other transactional systems. They classify, clean and enrich the data to facilitate reporting and analysis. In this way, the user can also compare actual and negotiated expenses, provide breakdowns of expenses by category, analyze scenarios, etc.
By linking data analytics directly to different purchasing processes, companies can ensure that decisions are made using the best information available.
Beyond cost cutting and risk
Purchasing sectors that already have mature processes, are rigid in their execution and advanced in their qualifications, show that going beyond basic data management presents opportunities for the way the company works with data and advances in strategic planning.
Modern procurement teams are taking multiple internal and external data streams, including structured and unstructured data, and combining them into centralized data management dashboards that leverage BI and analytics tools. This enriched data is then run through complex algorithms so that procurement professionals can gain 360-degree views of their spend, categories, suppliers, and geographies, as well as their own team’s performance and capabilities.
Other teams are developing data models that analyze historical spend, commodity, and supplier data to anticipate pricing trends and market shifts and develop strategies that align with those trends. As data quality improves and tools evolve, a “moneyball” effect will enable procurement professionals to automate category management and purchasing behavior and define automated, data-driven models to execute tactical purchases and fulfill orders.
Agility, efficiency and innovation
State-of-the-art analytics tools, specifically predictive analytics and artificial intelligence (AI), are driving agility, efficiency and innovation. Much of this evolution is being driven by the development of new tools by procurement and supply chain analytics providers. All of these solutions are essentially designed to remove manual work and free up procurement professionals to participate more effectively in strategic business planning and supplier negotiations.
Procurement strategies cannot ignore data-driven logic and insights. As the amount of data grows, so does the need for analytics in the procurement sector. Procurement executives need to have a data analytics and Big Data plan in place. This way, procurement teams can also harness the power of multiple data streams and benefit from the best that intelligence can provide: better decisions and positive economic impact for the business.
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