Turbocharge Your Procurement Analytics “Horsepower”
Now more than ever, companies need actionable insights from their data to improve performance in every part of the organization and to help weather Covid-19 and all its economic impacts. Organizations are rich with supplier data, and leading procurement teams are tapping in to unlock positive impact the business in ways they never could before.
For instance, some are using new insights to create more effective category plans; fair market pricing evaluation to maximize savings; analysis of consumption patterns to reduce overall spend; and analysis of preferred supplier compliance, contract usage, and buying channel distribution to address savings leakage.
By applying better analytics that drive deeper insights into their spend profile, procurement teams are providing their business partners the ability to unlock faster and more impactful decisions resulting in increased cost savings, decreased operating costs, and reduced risk – three key areas all companies want to improve.
Unfortunately, procurement teams that truly benefit from analytics are the exception, not the rule. Many are just beginning to tap into the power of spend analytics or have no capability or investment in this area at all. Finding the right analytics solution is an essential step toward progressing through the journey of data management, data science and insights, and workflow management of the executables.
Where to Focus Your Analysis
With the enormous amount of spend/supplier data available, you’ll need to know how to use analytics effectively to unlock the most impact.
You should first define and prioritize the problem you are solving for your business. This helps you to figure out the kinds of data you’ll need as well as the right type of analytics needed to generate insights that impact those priorities.
As companies have pivoted to a remote work environment and are looking to slash non-essential spend, policy compliance adherence/non-adherence could be an area that drives significant business impact.
But how do you increase your view of compliance to enhance savings and mitigate this risk?
Compliance insights are a key lever organizations can use to increase control and reduce risk. Most organizations track some level of compliance, but the definition of compliance varies for each business.
Compliance can be much more than just tracking and monitoring the usage of “preferred” suppliers. By increasing your analytics from preferred suppliers, you can expand into buying channel compliance – ensuring the business owner is using the right channels and contracts to minimize operating costs. From there, you can start digging into other areas that can avoid unnecessary costs such as PO policy compliance.
For instance, if your PO limit authority is $5,000, analytics and insights can identify where requestors are repeatedly placing PO’s near that approval authority threshold and use that to drive a deeper investigation. In another example, analytics can detail line item invoice pricing and compare that against contracts with a supplier, highlighting any discrepancies between the contract and invoice price.
The following are Analytics and Compliance Insights examples and the Focus Impact Areas that can be realized:
Unlock the Power of Your Data
Millions of data points are locked within the typical procurement process. Some is your own company data, while other data comes from various external sources.
Many companies struggle because this data remains inaccessible and unutilized because procurement teams don’t have the time or ability to turn it into the actionable insights they need. And that’s why it’s critical for companies to focus on increasing the maturity of their analytics capabilities.
Whether you have yet to begin your spend management and analytics journey or you’re already on your way, this is an ideal time to consider what you need to do to implement impactful solutions in response to the current economic climate.
Regardless of your current capabilities, strengthening your analytics horsepower will help to dramatically boost procurement’s performance and enhance the strategic impact your team has on the entire business.If you’re ready to see just how effective a comprehensive procurement analytics system can be in driving major savings, improving cash flow, and saving 2020, reach out to our team today!