Resilient supply chains and processes are more critical than ever. But how can your procurement department put this into practice?
One of the best ways to improve processes is to invest in the power of data with procurement analytics. Many chief procurement officers (CPOs) do not have the technology to leverage data. A study found that only 10 to 20 percent of procurement data is used to drive decision-making on average.
The good news is that there is a solution. Data analytics in procurement can help you make the most of data to inform your decisions. Keep reading this procurement analytics guide to learn more.
Procurement Analytics Explained
Are you wondering how procurement can embrace the digital age? Analytics is the answer.
Procurement analytics gathers and analyzes procurement data to improve operations. Programs use quantitative methods to present insights in a precise and visual way.
The software presents data from different sources on one procurement dashboard. Sources can include:
- Supplier-provided data
- Transactional ERP
- Public internet data
- Third-party proprietary
Usually, procurement teams do not source this data. And what use is data if you do not analyze it? Analytics helps get your data analysis up to speed, so you do not fall behind competitors.
Procurement Analytics Examples
Analytics work in different ways to offer the most insightful data for businesses. There are different types of procurement analytics, including:
- Descriptive analytics
- Diagnostic analytics
- Predictive analytics
- Prescriptive analytics
Prescriptive analytics use data models to help offer solutions for businesses. It can aid in decision-making and streamlining procurement processes. Predictive analytics uses historical and current data to forecast future procurement outcomes.
Descriptive analytics explains data. Diagnostic analytics helps find causes for outcomes using statistical models. Analytics can cover contracts, spending, suppliers, procurement benchmarking, and other invaluable applications.
Benefits of Procurement Analytics
Big data analytics in procurement is one of the best ways to generate value for the company as a whole. It is time for procurement to embrace the digital realm and reap the many benefits it offers. Read on for some of the top benefits of analytics.
Save time chasing the wrong suppliers with procurement analytics solutions. Solutions will mean you find the most suitable strategies to deal with suppliers.
Analytics also help identify what suppliers to source. You will have valuable supplier data to inform negotiations. Analytics also help time sourcing and proposal requests to achieve your desired outcomes.
Better Contract Management
Analytics supports contract management at all stages. Every step is covered, including:
- Valuable data for negotiations
- Alerts that it is time for contract renegotiation
Procurement analytics helps you identify how to manage suppliers. For example, you can determine whether they are strategic or stationary without delays.
The software also provides accurate data to plan supplier development roadmaps. You do not have to waste time finding the best way to manage suppliers. And there is less risk of damaging relationships due to insufficient data.
You will also know whether you are getting the best pricing, including the whole life cost. So you will always be in control of contracts.
Data analytics in procurement also improves category management. The procurement analytics dashboard provides the broad oversight managers need to stay in control.
For example, you can improve your risk mitigation, such as supply risks. Identify low-spend suppliers, form mitigation plans, or find more sources of supply.
You can also identify cost savings and find actionable solutions to lower tail spending. Identify high-volume suppliers and how you can save on administrative costs.
Also, you can identify low-value spending that is outside company policy, such as food orders and travel expenses. Data will give you the leverage you need to change company policy. It will make the changes you have to fight for easy, such as employing more people and managing risks.
You can also reduce security risks and improve transactions too. Analytics will identify unusual spending, which can often go undetected. This helps reduce the risk of fraud.
Analytics also ensures you remain compliant with regulations and avoid mistaken payments. There is no risk of human error when examining large amounts of data thanks to AI technology.
Procurement analytics will measure order cycles, payment conditions, and transaction accuracy. It will flag rebate options and other transactional factors essential to cost savings.
Sustainable Procurement Solution
There is a growing demand for businesses to examine ways to be more sustainable, and procurement is no exception to this need. Supply chains and procurement decisions can have a devastating social and environmental impact. Analytics are the sustainable procurement solution you need to find alternative sustainable solutions.
Procurement Analytics Tips
Not all procurement analytics are equal. You must find reliable data sources that work for your business. Focus on:
- Your business needs
- Quality data
- Customer reviews
Look at your procurement needs, such as how fast and often you need analysis. You can also consider whether the procurement analytics solution fits your company structure.
It is also essential to know how to utilize the procurement dashboard. Pick analytics software that provides user support and guidance. You also want to use a reputable provider that offers transparency, connectivity, and quality data insights.
Discuss procurement analytics with other key stakeholders such as your finance department. They can help you source the best product that will benefit the entire business.
The Best Procurement Analytics Solution
Procurement analytics unlocks the digital realm for your procurement department. It is the best way to leverage data in a meaningful and actionable way. The software also presents data on one accessible procurement dashboard.
Improve supplier and departmental relationships with efficient data use. You will also mitigate risk and improve cost savings with analytics. These are some of the many reasons it is time to invest in procurement analytic solutions.
Thinking Machine Systems offers the best procurement analytics solution driven by AI. This cutting-edge technology helps put your department above the competition. See our platform in action to get started.