The importance of accurate, real time procurement analytics
The importance of accurate, real time procurement analytics
Procurement of goods and supplies whether handled directly or indirectly all follow specific steps to evaluate demand, purchase necessary items or services, and manage orders from start to finish. For businesses who operate with a limited supply or manage inventories with replenishment processes that happen ‘just in time’, finding gaps and inefficiencies in the procurement process can translate to shorter receipt times, reduce network risks, and lead to a myriad of cost saving opportunities. Taking a proactive stance and examining KPIs and metrics allows supply chain leaders to break apart each segment of the procurement process to monitor effectiveness and reveal weaknesses in the chain. This includes areas such as:
- Suppliers
- Order management
- Sourcing
- Supply
- Risk
- Performance
As well as uncovering improvements to make the procurement process more sustainable, accurate procurement analytics supports new implementations. Time-saving innovations can be introduced across the network, improvements may be driven in procurement-to-pay functions, and leaders can be provided with a holistic view of their entire operation. While this will allow systems or automations to be incorported and help businesses gain from cost saving opportunities, it also gives managers and leaders to make responsible and informed decisions to maintain quality and achieve long term value.
Growth has ground to a halt and many companies have hit a pause on any large investments for the short term as they continue to run in survival mode. With National Insurance payments rising too, supply chains are being hit from all sides as they increase salaries to help their employees offset the higher cost.
The combination of disasters including the recent war in Ukraine has created a situation globally that is almost untenable. Supply chain businesses that need to turn profits are struggling to not only acquire and deliver on time, but also to keep staff, clients, and shareholders happy.
In a desperate attempt to reduce energy costs and maintain operations, supply chain businesses are using everything in their power to find savings wherever possible. Including assessing energy consumption across facilities, offices, and warehouses. Lighting, equipment, and technology all require energy, and company leaders are tightly monitoring the use of heating and air conditioning and employing money-saving tactics like timed thermostats and well-insulated buildings to minimise spending.
Changes in things such as LED and fluorescent lighting uses 80% less energy and emits lower heat, reducing the burden on heating and cooling systems. While this may seem extreme to larger organisations, the weekly savings from frugal energy use might make a substantial reduction for smaller or mid-sized companies. As the winter months draw closer these types of cost-saving initiatives could be the difference between continuing to run their supply chain business or filing for bankruptcy.
How procurement analysis works
Performing in-depth procurement analysis relies heavily on the data available and predictive analytical tools. i2B DataKITE collects information from multiple sources and extracts historic transactions to provides a whole of cycle overview. Data is verified and validated for accuracy, and mined data is stored in a database which is organised and categorised to convert structured and unstructured data into useable insights.
As data is enriched and filtered it provides the basis for company-wide analysis and is extracted to supply key performance indicators, trends, and metrics. Using analytical tools, the data is formatted and converted into a series of easy to interpret dashboards providing business owners and key stakeholders with clear visibility into procurement functions.
Leaders and stakeholders can pinpoint cost savings, plan better, and make more intelligent decisions that level out fluctuations across high pressure periods like peak season and sustain operations through unexpected events.
Benefits of procurement analysis
Having the ability to gain deep insights into business spending with procurement analytics, helps organisations by providing a complete 360 degree view of their supplier and purchasing activity. The information extracted can be used to give companies a leading edge in inventory management and diversify their supplier or vendor options to support procurement efforts. Software tools allow the fast manipulation of data with a predictive view into impacts and outcomes, giving a clear vision of the best course of action to take in any given scenario. With the capability to run multiple possibilities and forecast the outcome of decisions right through to the conclusion, costs and supplies may be easily tracked and bottlenecks avoided. Strengthening and maintaining procurement practices supports internal and external stakeholders like purchasing managers, category managers and CPOs.
Automations and optimizations may be implemented to remove repetitive tasks and improve data accuracy. Resources can be freed up as analysts shift focus from data extraction and management to reviewing dashboards and using insights to drive positive changes in organisational expenditure. In real terms, this can support more effective contract management, reduces risks, and improves compliance across the network. Problematic occurrences can be quickly addressed and issues with specific vendors may be highlighted and dealt with. Improved resource management and purchase order value and volumes can be easily compared across vendors, and better supplier relationships can be maintained using information from procurement analytics. Streamlining business services, driving greater accountability, and improving efficiency all translates to cost saving opportunities and better service provision for supply chain companies.
To find out how i2B DataKITE can help you get more out of your procurement data complete the form below and a member of the team will get in touch.