Data is everywhere in the digital age and more and more businesses are looking for ways to effectively use data to deliver improved outcomes for the organisation. Data is also helping buyers make smarter decisions when purchasing from suppliers.
Many procurement and sourcing teams continue to fight new data driven approaches to the buying process. However, the availability of data sources will continue to grow as technology advances.
The purpose behind procurement analytics is to use the wealth of data sources available in organisations to increase revenue and decrease the cost of doing business.
What is procurement analytics?
It is the process of collecting and analysing procurement data to form meaningful insights and aid effective business decision making.
Rather than awarding contracts based on lowest price, gut feel or previous relationships, sourcing teams can utilise data to consider variables such as current market pricing, risk assessments and past performance data, in decision making.
Using data analytics, organisations can evaluate current pricing and availability from suppliers, historical transportation and logistics costs, as well as other variables, and be confident they are getting the best quality products at the lowest cost.
Why is it important?
A common misconception is that procurement analytics only covers spending analysis, however, procurement analysis is much broader than that. It covers all areas of the procurement process from strategic sourcing to category management, procure to pay, and contract management.
Procure-to-Pay (P2P) provides optimised purchase order and invoicing workflows. Analytics can reduce or even eliminate maverick spending – purchasing without going through the proper approval channels.
Category Management provides a deep analysis and organization of data that makes it easy to segment goods and services, as well as identify savings opportunities. By understanding the vendors you work with, you can lower costs by sourcing products and services more easily.
Strategic Sourcing analysis reveals optimal timing and markets for sourcing events. Advanced vendor compliance and performance information lets procurement teams identify the best suppliers for a given project.
Contract Management can assist in contract negotiations to strengthen your position during supplier negotiations.
What opportunities does it offer?
Organisations that embrace procurement analytics can benefit from a range of insights. Put procurement analytics to work in your business and reap the benefits of profitability, improved competitiveness, process optimisation and the ability to make smarter, more strategic decisions throughout the procurement process.
Agilus Solutions provides a FREE Data Analytics Awareness presentations. To book a FREE session for your business, simply click the link below and we will contact you to set up a convenient time to meet.