Most procurement organizations dream about working in a technologically-rich environment where everything is automated, like requisition, purchase of goods/services, invoice creation and matching to payments.
Advanced technologies such as artificial intelligence, bots and analytics work in tandem and accelerate the work while improving the outcomes. But, gathering and maintaining sufficient data is a dream that is almost impossible with the paper-based procurement processes.
Typically, procurement companies collect transaction information while missing out on the contextual data surrounding the purchasing decisions – the steps the procurement team takes to approve requisition, contracts or RFPs. In some cases, the data may be limited to very little transaction data and lacks the right information needed to generate accurate insights.
However, the robust procurement solutions centralize all the crucial data on a secured platform, giving procurement teams better visibility and access to the data and boost compliance while reducing risks. This data helps to build knowledge models that make AI learn procurement language and improve the speed and efficiency of the procurement process. With the predictive data analysis, businesses can assess suppliers’ data, perform spend analysis and compliance checks.
Here we have discussed a few ways procurement teams can use data analytics to develop a more streamlined buying process.
1. Extract More Value from the Sourcing Process
The procurement software provides businesses with the suppliers’ past performance data, including previous business dealings, issues, pricing and quality of services. This detailed analysis helps to check and predict the problems that may affect if you work with the suppliers. Analyze market price, conduct risk assessment and award contracts to the right suppliers based on their past performance data rather than pricing. The software also provides shipping data and helps to optimize souring routes, thereby extracting more value from the logistics process.
2. Pinpoints Changing Customer Demands
Data analysis helps to identify ever-changing customer demands and allows you to predict changes in the supply chain and demand for purchasing. The data can be used to make logistics more efficient by eliminating duplicate effort throughout the procurement process and create loyalty programs to improve customer service. Businesses can build a predictive model with data analytics to anticipate fluctuations in the market and adjust supply accordingly.
3. Purchase Best Quality Products at the Right Price
In today’s competitive market, procurement teams are under pressure to get the most out of the supply chain process with low investment. With accurate data analytics, procurement teams can compare real-time market pricing and purchase products from the right suppliers based on their performance, history of order accuracy, logistics costs and other variables. This ensures that the businesses are getting the highest-quality products at the best prices.
4. Obtain Both Internal and External Views on Spend
Although most organizations are working in the era of big data, there are still a few procurement companies that are still relying on internal views of spend. These companies are getting grips with their past spend data, including internal taxonomies, supplier information, and transactional data. The software allows the ability to obtain and combine internal data assets and relevant external data assets and helps to benchmark the performance of the procurement process against peer groups in real-time. Even though this paradigm shift is difficult to master, its consequences are revolutionary.
5. Tap Unstructured Data
The business database consists of tons of structured and unstructured data. Processing this unstructured data is beneficial for the organization. The procurement software enables you to encompass everything, from text files, spreadsheets, and presentations to emails and social media content. This data analytics gives timely insights into supplier information and helps in making better purchasing decisions.
The Bottom Line
Earlier, procurement teams were characterized as a tactical team primarily focused on cost reduction. In today’s technologically-advanced market, procurement leaders are expected to play a strategic role in enterprise growth. To meet the changing requirements of the organization, procurement teams seek more visibility and control over spend data. They want to analyze the data swathes generated throughout the procurement process for key insights that help them to make valuable decisions. So, invest in a robust procurement software that provides accurate data analytics and helps to transform the way you purchase products from suppliers.