The Importance of Data and Analytics in Enhancing Procurement Functions
The procurement function has a wealth of data which can be used to enhance the performance of the entire process. Most businesses don’t have the proper tools to capture this type of data, much less apply the analytics and turn that data into something useful.
Generally, procurement systems only collect transaction data and line-item information. This process, however, misses the data that gives context to purchasing decisions, such as information on vendors and the review and approval processes.
Today, data is an important tool for business success. Collecting accurate data in a usable form is necessary to solve procurement problems, avoid departmental issues, or realize how to capitalize on more value from your procurement methods.
More than ever, organizations need actionable insights from their data to enhance performance in each part of the company. Here, we explain what type of data does procurement provide, how to collect it, how to see the benefits of data analysis, plus how technology plays a crucial role in the entire process.
What Kind of Data Does Procurement Offer?
Data gathered from procurement offers you insights into various spending patterns and habits. The purchasing process can also supply data that provides context for improved purchasing decisions. This includes information on the steps it takes to review and approve a requisition or to set-up new contracts with vendors or suppliers.
You can also collect data on compliance and overall performance. Including information related to the time it takes to generate POs, whether employees are complying with purchasing regulations or not, and comparisons of planned versus actual spend.
You can collect a lot of other data from your suppliers, like contact information, pricing quotes, and contracts which are essential to keep your procurement team run smoothly. You can also keep track of performance data related to suppliers, such as how quickly they fill your orders and whether or not they are responsive to questions quickly.
How to Collect Accurate and Useful Information?
Just because data is always readily available doesn’t mean it’s as simple to collect, especially in a useful form. You will need to verify all your spending is categorized correctly, meaning you need a standard categorization tool. With an advanced spend classification system, it’s easier to analyze the data you gathered and use it effectively for the future.
It becomes difficult to collect clean, accurate, and useful data manually. Advanced software solutions with a purchase order module can automatically enforce compliance, track spend categories, and gather each piece of data related to the procurement functions.
How to Use this Procurement Data?
An automated system collects all types of procurement data in a form which is easy to read, access, use, and learn from. These insights you gain from collecting this data will help your business discover opportunities to save money, develop effective procurement strategies, enforce compliance, and create accurate budgets. It can also provide procurement managers the useful data they need to build better relationships with their suppliers and vendors.
Procurement data also gives you real-time spend visibility. Automated systems update data in real-time, so you will always have up-to-date information on exactly where the money is going and to who. Accurate data will also provide warning signs when something goes wrong in the procurement process.
How to Apply Analytics to Procurement?
Analytics help you take all this collected data related to spend, contracts, suppliers, etc., and combine it. The beginning stage of analytics within procurement is descriptive analytics – it starts with the data being processed and creates a summary of it to offer information about what happened and what needs to change in the future.
Next, you start with diagnostic analytics. This stage runs statistical models to answer these specific questions. Then, you can bring in predictive analytics to look at current and past data to forecast future trends. At last, use predictive models to enhance decision making and find the best course of action for any given situation.
When you apply all these levels of analytics together in future procurement, you will make transformative changes within your procurement process. Using procurement analytics can decrease operating costs, reduce risks, and boost procurement’s strategic impact on the whole business.
As procurement becomes more data-driven and less process-driven, you will help your business stay on top of things by investing in an automated system to streamline every aspect of the procurement process. An online software solution like SutiProcure will make it easy for your procurement team to gather data and make it available for future use. It offers the necessary tools required to gather, store, and access procurement data at any time. This solution makes the entire procurement process easier for employees by collecting the data in a format you need which is easy to use.