With vast quantities of data at their disposal and tools that can turn information into valuable insights, now is the time for procurement functions to harness analytics and exponentially increase the value they deliver to the business.

Twenty years ago, big data was not an issue in procurement. Simply managing warehouses and the hundreds of orders that they contained each day was a complex enough task. But technology has changed the way we work and introduce quality, efficiency, and agility in our supply chains. Big data has entered our vocabulary as we seek insights from new business channels such as e-commerce, web store management systems, mobile procurement apps, and even social media.

Despite the enormous amount of data available to procurement professionals today – whether it’s transactional data from e-commerce sites or analytics derived from business performance metrics – many still aren’t harnessing analytics for maximum value. Some are still using spreadsheets and gut instinct to make decisions.

It’s a big mistake because they’re missing out on the benefits that auto-recommendation software, machine learning, and other analytics techniques can deliver, including:

Prescriptive insights that provide optimal supply chain execution. Analytics can do much more than identifying issues in a supply chain – it can also provide recommendations to optimize the execution of a procurement strategy. For example, if analysis shows that spending is too high in one part of the supply chain, recommendations could be made to reduce costs in that area without impacting overall spend or negatively impacting customer service levels. This prescriptive approach allows procurement professionals to make smarter decisions while minimizing potentially costly disruptions in the supply chain.

Analytics can do much more than identifying issues in a supply chain – it can also provide recommendations to optimize the execution of a procurement strategy. For example, if analysis shows that spending is too high in one part of the supply chain, recommendations could be made to reduce costs in that area without impacting overall spend or negatively impacting customer service levels. This prescriptive approach allows procurement professionals to make smarter decisions while minimizing potentially costly disruptions in the supply chain.

Reduced cost and time to make irreversible decisions. Today’s analytics tools allow for real-time prescriptive guidance allowing decision-makers to avoid surprises. For instance, if a decision is made to delay an impending order, analytics could be used to identify all the associated costs and notification requirements, so that it can be executed properly.

Today’s analytics tools allow for real-time prescriptive guidance allowing decision-makers to avoid surprises. For instance, if a decision is made to delay an impending order, analytics could be used to identify all the associated costs and notification requirements, so that it can be executed properly.

Better supplier relationships. Analytics can help procurement professionals monitor and optimize supplier performance and risk while developing stronger relationships with suppliers along the way. Analytics can be used to identify the relationship strength of a supplier, and compare it against their peers; this analysis can then be used to determine the best time to sign new agreements.

Analytics can help procurement professionals monitor and optimize supplier performance and risk while developing stronger relationships with suppliers along the way. Analytics can be used to identify the relationship strength of a supplier, and compare it against their peers; this analysis can then be used to determine the best time to sign new agreements.

Interested in reading more about technology in businesses? Digital Transformation – Successful Foundation in the Cloud discusses the transformation towards a digital platform for a business.

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