This series includes articles dedicated to Procurement Skills of a Sourcing Hero, Innovation, Looking Beyond Cost, Market Intelligence, Maverick Spend, Supplier KPIs, Supply Chain Disruption, and Transparency.
As a procurement professional, trying to figure out exactly what data you need and where it’s stored might remind you of being back at college, studying and taking notes for a major history exam.
There’s so much information to take in and you can’t possibly learn the dates of every single conflict or Presidency. At the same time, it’s impossible to know which period of history you should prioritize learning because until you sit down and open that exam paper, you simply don’t know what you need to know, or what information will prove most valuable.
And what should you do with your notes after the exam? Throw them away, or store them somewhere just in case they’ll come in handy one day? The bad news is that there’s no way around it. In exam preparation, you’ve just got to cram in as much information as possible.
The good news, however, is that it doesn’t have to be this way when it comes to procurement data.
The benefits of good data management
Today, 97.2% of organizations are investing in big data, with the market set to reach $103 billion by 2023. But, given that 90% of all data has been created in the last couple of years, it’s no wonder procurement professionals are struggling to make sense of their organization’s data and leverage its full potential. In fact, less than 0.5% of the data currently available is actually being analyzed.
For Sourcing Heros and other procurement professionals, the use of data analytics and big data present exciting opportunities, including:
- Predictive analytics to reduce and mitigate supply chain risks, helping to guide procurement professionals in their decision making.
- Evaluating supplier performance and current market prices to help decide how and where to award contracts and whether or not to renew existing ones.
- Analyzing evolving consumer expectations, predicting future demand, and working to ensure ongoing customer loyalty.
- Unlocking vast quantities of untapped data in Word documents, emails, presentations, spreadsheets, and social media to provide real-time insights into supplier behavior.
- Gathering real-time, external data to guarantee buyers are obtaining the best quality product at the best possible price.
- Enabling innovation and collaboration with suppliers via increased supply-chain transparency.
Three data challenges impacting procurement
Procurement professionals have three major hurdles to overcome before reaping those benefits.
1. Managing large amounts of disparate data
A Gartner study reported that the financial impact of poor data quality comes at a cost to organizations of $9.7 million each year, while research by IBM found that businesses in the U.S. lose a total of $3.1 trillion every year due to data issues.
One major challenge is processing and aligning data from numerous IT systems and sources. These systems are already collecting vast amounts of varied data including everything from supplier data to purchasing data and sourcing information, but it’s just not useable. To begin making sense of it all, teams must reduce manual data management and invest instead in software that can store and organize the data.
2. Driving actionable insights
In addition to simply organizing data, technology can be used to analyze it, negating the need for humans to identify trends or patterns in such a huge data pool. The purpose of storing massive amounts of data is that it can enable procurement’s decision-making processes.
Technologies including the internet of things (IoT), blockchain and AI are best placed to help turn data into actionable intelligence. IoT devices, such as location-tracking or machine sensors, make it easier for procurement professionals to obtain information in real-time. Blockchain promises to ensure that any data collected is trustworthy, and AI will enable teams to quickly and efficiently analyze huge sets of data.
Before investing in technology to manage your data, consider what you need it for and what you are trying to achieve, the costs associated and ongoing maintenance requirements.
3. Organizational buy-in
The final data-management challenge is achieving organizational buy-in and compliance. This includes deciding who has access to your company’s data, how they access it, and a change-management effort to ensure that employees are willing to embrace new technologies.
Managing big data and utilizing techniques such as predictive analytics demands a new working approach and new skill sets, which means either hiring new staff or upskilling your existing employees. For those who don’t directly operate the new software and technologies, it’s still important to offer education on the value of good data management. You’ll need to account for the time it will take for employees to adapt to these operational changes, which could temporarily impact productivity.
The enabling power of technology
Imagine how impressive your grades might have been in college if you’d had the assistance of sophisticated AI to help you study. Procurement teams in 2020 have access to an enormous range of procurement analytics software providers, meaning the many benefits of big data can finally be unlocked.
A bigger pool of data means more insights that are powerful. Get in touch with the team at Una to talk about the observations we’ve gained from the collective data pool of our member organizations.