Today’s article is a preview of a report that Ardent Partners recently published entitled, Next-Gen Spend: Accelerating Procurement Performance with Data-Driven Strategies. The report is sponsored by GEP and interested readers can download it here.
There may be no greater advantage for the modern enterprise than visibility. Today’s procurement organizations are often under pressure to not only drive down costs while improving category management, but to also enhance their array of source-to-pay processes in support of larger enterprise objectives. While collaboration, automation, and other core strategies advance procurement’s overall value and influence, it is within the realm of intelligence that Chief Procurement Officers (CPO) and their teams may find the greatest organizational impact. In fact, the next great path to procurement performance improvement will be blazed with the next generation of spend analytics and data-driven strategies. This report focuses on those key elements.
Spend analytics tools can provide automated, repeatable, and scalable solutions to help enterprises manage transactional data and make better informed buying decisions. They can help overworked and overwhelmed CPOs and procurement teams aggregate, categorize, cleanse, and analyze spend data and then distill it down into intelligence that sheds new light on old sourcing, spend, and buying behaviors. From there, CPOs and procurement teams can alter sourcing and buying decisions, such as shift some spend from one category or supplier to another, or source more spend from a strategic supplier that can supply a greater number of categories under one contract. But there is another level of insight that spend analytics can access.
CPOs and procurement teams can go beyond managing and analyzing transactional data, and “dig deeper” within supplier performance and risk information to provide a truly holistic view of their spend. In an increasingly globalized world, there are many more factors that can affect buyer-supplier relationships than purely spend and supplier performance. For example, the political or regulatory environment where a supplier operates, the issue of slave labor or fair-labor practices, and / or local economic conditions can all shape the risk profile of a given supplier. That information exists somewhere, and it frequently exists outside of an enterprise’s spend data.
Next-generation spend analytics will integrate supplier performance and risk information with historical transactional data to present a truly holistic view of an enterprise’s spend and sourcing behaviors. It will take advantage of third-party information sources, such as local news media coverage, economic analyses and outlooks, and political analyses and collocate this information with related suppliers and categories to enrich an enterprise’s understanding of the risks. From there, CPOs and procurement teams can make better informed buying decisions, basing them not just on how much the enterprise saved last year by sourcing a commodity or several commodities from a given supplier, but on the economic or political outlook of the country where that supplier was located, their labor practices, how well they comply with national and international sourcing regulations, and so on.
Next-generation spend analytics will also take advantage of more robust algorithms that allow procurement practitioners to automatically dig deeper beneath the surface and extract greater insight from the sourcing, supplier performance, and supply risk realms. With so much data and information lurking in world today, CPOs and procurement teams cannot possibly wrap their arms around it all. But with next-generation spend analytics processes and tools, they can access the data and information that matters to them the most, and use it to make better buying decisions.
We are really excited about this report, and are happy to provide it free of charge. Interested readers can download the full report by clicking here (registration required).
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