Editor’s Note: Today’s article picks up where a previous article, Beyond Savings and Risk: Next-Gen Procurement Analytics are Coming into their Own, left off. There is an enormous amount of value in Big Data, and for those that can harness its power, they can do truly amazing and innovative things with it. Today’s article is meant to help Chief Procurement Officers (CPOs) and their teams break out on analytics.

By and large, the average procurement organization has considerable work to do to improve visibility into spend, sourcing, compliance, suppliers, risk, and seemingly every other business element within their purview. Whether it is through greater process automation, standardization, linkage, and solution adoption, or by providing visibility and intelligence and reaching across the hall or outside of the organization to aid different stakeholders, there is work to be done. Thus, the following are some recommended strategies for CPOs and procurement teams of all maturity classes seeking to gain more value from their data:

• Link Spend Analysis with eSourcing: The visibility and intelligence residing within spend analysis can inform sourcing decisions to a greater degree and provide greater cost savings and agility in supplier relationships. There are powerful ways and means to make this happen in 2019.
• Link contract management with supplier performance management: Likewise, mating contract intelligence with supplier performance is a natural way to verify supplier compliance with T&Cs and SLAs and that suppliers deliver what was agreed to at the outset of the deal. This is a no-brainer.
• Automate and digitize processes as much as possible: This is another no-brainer. The clearest path to successful Big Data management starts and ends with the tools that are utilized to perform the work. Process automation tools help facilitate the speed of execution, enable greater transparency and accessibility, and aid in the drive for enhanced visibility.
• Use Big Data visibility as a collaboration enabler: Obviously, visibility provides opportunities for improvement inside and outside of the enterprise. But this also includes sharing intelligence and working to proactively manage risks and improve supplier performance ahead of time. Like in government, “need to know” should become “need to share.”
• Hire and/or develop a group of procurement “data scientists:” Although procurement professionals often lean on traditional approaches for managing enterprise spend, it is through “next-generation” strategies and spend analysis solutions that the function’s true opportunity will be realized. Procurement teams need new capabilities to get there.
• Consider more refined uses of data, such as AI and predictive analytics: Augmented intelligence (AI), including cognitive computing and predictive analytics capabilities, can serve as force multipliers for resource-strained, yet mature procurement organizations that need to take their operations to the next level. By deploying these technologies, procurement teams of all maturity classes can take their analytical, alerting, and reporting capabilities across the source-to-settle spectrum to the next level.

However, teams that struggle to standardize, digitize, link, and/or automate procurement processes to gain maximum visibility into KPIs and performance metrics ought to prioritize interim steps before considering more robust steps, like AI and predictive analytics.

Conclusion

In 2019, procurement strategies that avoid or bypass data-driven logic and insight are anachronistic signs of an earlier time when procurement was a back-office function, marginalized, irrelevant and without standing. The proliferation of data in business requires analytics to be on the rise in procurement and for CPOs to have a Big Data plan. Procurement teams that can harness the power of multiple data streams without getting soaked stand to benefit the most by the rich intelligence that it provides, and the enhanced decision-making and impact on savings and risk that can result.

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Tagged in: Ardent Partners Research, Ardent Team, Chief Procurement Officer, CPO, Innovation, Lists, Process, Source-to-Settle, Strategy, Technology, Transformation