What is Procurement Analytics?
Procurement analytics is the process of using quantitative methods to derive actionable insights and outcomes from data. It involves the capture and use of data to support fact based decision making and gaining competitive advantage. It reports typically on what has happened in the past and creates estimate, using the predictive analytics based on historical data to guess what will happen in the future.
The data is playing a great role in business management. It has helped in creating the data, saving and re using it later. Even major reports of a firm are created with the help or data and so the procurement has also become data driven. From the central operations where every buyer and category manger conduct an analysis, it becomes important.
The majority of the key decisions of procurement struggle due to problems in managing the data. The future of the procurement is really big. It is becoming more important. Procurement will further need many tools, systems, capabilities and processes to ensure the usage of the data to create the best decisions related to the business.
According to a research, use of analytical tool has increased the demand forecast accuracy by 55% which has led to increased contract negotiation power and decreased chances of stock outs.
What is done under procurement analytics?
Applications of Procurement Analytics
- Contract management: This optimizes the discount levels and forecast the liabilities in terms of finance.
- Vendor evaluation: it factors the deliveries that have been done timely, quality of materials and time and effort to bring resolution to the problematic order including lowest cost.
- Supplier Relationship management: This counts the vendor score , purchase order value and the PO volume.
- Spend analytics: the procurement analytics examine multiple types of data sets like tax data, invoice data and creates a different look at the elements in the data form. This decreases the maverick spend .
- Demand forecasting: Average of the whole cycle volume is generated using the data .
Why is Procurement Analytics important?
It is because a terrific increase has been seen in it. The information created by machines and used by other machines will probably grow faster than anything else. This is primarily database to database information. People are only tangentially involved in it.
How will analytics support a Procurement Organisation?
First, we should have a look on the challenges of implementation
- Data is in multiple systems.
- Existing data is not analyzed.
- Skill set in an organization is not available.
- Right technology is not available.
- One-off versus operationalised.
Implementation of the Procurement Analytics
Skills of the firm are developed and shared. The support of other sis gained through developing leadership qualities. The fact-based decisions are taken and are not based on gut feelings. The existing systems are fully utilized within the business. And in the long term, the investment in e-procurement suite and specialized analytical tools is done.
Contact us today to know more about how Simfoni’s technology and processes can help your organization achieve world-class Spend Analytics