Supply Management: Big Trends & Predictions for 2013 (Big Data)

Posted by Andrew Bartolini on January 3rd, 2013
Stored in Articles, General, Lists, Strategy

Happy New Year and welcome back to CPO Rising!

In 2010, we introduced this site with a series of 10 lists, predictions, ideas and strategies. Now in our fourth year, I think it is time to harken back to those earlier days by publishing a multi-part series on Supply Management Trends & Predictions for 2013.

Big Trend #1: Big Data Gets Bigger in 2013

Big Data is and has been a Big Trend in business for the past few years – stretching across all parts of the enterprise. Data has become a major driver of business strategy and a major driver of performance reviews. While lagging other business functions, it is fair to say that the supply management world has become increasingly data-driven.

Big Data Prediction #1: Data’s Importance to Supply Management Operations Will Continue to Accelerate

Supply management data will continue to grow in quantity and importance and procurement teams will need the systems, processes, and capabilities to make sure that the data is used to make smart decisions. There is a better understanding as to the value of data today than there was in 2010. The systems in 2013 are more usable, effective, and powerful than what was available in 2010 (the gains in these areas have been consistent, if not dramatic, in recent years); and there is an overall orientation towards quantitative analysis within the enterprise that was only starting to emerge in 2010.

Despite the increasing importance of data, we have not reached a point within procurement’s (or supply management’s) evolution where every group has enough data (or enough high-quality data) AND an ability to frame and analyze it fast and well enough to drive the majority of key decisions. This leads to prediction #2

Big Data Prediction #2: The Gap Between the Data “Haves” and Data “Have-nots” Will Widen

The dual challenge with supply management data (and data in general) remains (1) capturing the right data and (2) using it well. Last year, Ardent Partners’ Research (no registration) showed that less than half of all enterprises have full visibility into their spend. As we will show in a the upcoming articles that focus on our latest research report, the state of spend analysis has not changed – when it comes to spend analysis today, there are far too many “have nots.”

Best-in-Class procurement organizations are 80% more likely to have full spend visibility so it is not surprising that they save more and report higher rates of compliance than their peers. These leaders manage more spend and they manage it better and their visibility into the spend plays a big role in helping them do so. Many procurement departments will begin initiatives to gain spend visibility in 2013, but in doing so, they will be addressing a “first generation” problem (something I also refer to as ‘basic blocking and tackling’). While these groups focus on understanding their spend for the first time, the leading procurement departments, who already have spend visibility, will begin to extend their advantage by tracking spend trends more closely (and in real-time) to better understand internal needs and behaviors as well as general market dynamics – all of which, will help the business be more responsive and ultimately, more successful. As one Chief Procurement Officer interviewed for the upcoming CPO Rising 2012: Keeping Score report told me, “Our top priority in 2013  is to figure out how we can provide real-time analytics to the business.” The Best-in-Class will do more with their spend data but they will also…..

Big Data Prediction #3: Leading Procurement Departments Will Begin Using Non-Spend Data to their Advantage

As I just noted, the percentage of procurement departments with visibility into spend is not great; when it comes to other supply management data, the numbers are even worse. For example, only 25% of procurement groups have visibility into contract compliance rates; slightly fewer have visibility into supplier performance. More procurement teams who have solved the first generation problem of viewing and understanding their spend will begin to capture and analyze other performance and operational data and metrics so that they can begin to benchmark, analyze, and/or improve upon them. In particular, performance data – for suppliers and for the procurement department (more on this later in the series) will become a priority.

Big Data Prediction #4: More Procurement Departments Will Begin Using Third-Party Data to their Advantage

As procurement groups continue to capture their spend data in standardized (and centralized) dashboards, more and more opportunities to enrich that spend data with third-party data that offers insight and context will arise. For example, incorporating supplier financial information or news alerts alongside the supplier spend or performance data can help shape the next sourcing decision or raise a red flag early enough to avoid a disaster.

Third-party data will also become increasingly available to participants of the different business networks. The data may be generated by other network participants (i.e. ratings, feedback, payment history, etc.) or from third-party solution and information service providers who have partnered with the networks to deliver more, better, and more timely information to the network members.

Big Data Prediction #5: Analytical Skills Become More Prized Within Procurement Departments

As data continues to rise in importance within supply management, it goes without saying that the ability to process and analyze data will rise in lockstep. Procurement pros looking for greater job security should work deliberately to build out their analytical and number-crunching skill sets starting with an expertise in excel and continuing on to the mastery of the different supply management data and reporting tools that are in place within the enterprise.

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