The use of Big Data has become a key talking point in large organizations
Procurement organizations generate and store large amounts of data, which are often widely scattered across different systems and operations. But how can procurement professionals control all this data to gain insights that enable better planning and effectiveness?
Having data is a good thing, but analytical capabilities are the real game changer, allowing procurement to unlock the true value of large volumes of structured and unstructured data to reach the next level of performance impact across the entire company.
To broaden their command of data, above and beyond their traditional scope, procurement managers can focus on exploring three dimensions:
- Deepen fundamental data across the supply/financing chain. This could mean, for instance, integrating detailed supplier invoicing into the ERP (Enterprise Resource Planning) to preserve a high level of granularity in the type and quantity of goods and services purchased; thus adding new dimensions to spend analysis.
- Extract and leverage cost data per business unit / consumption unit (such as HR, Finance, Supply Chain, Manufacturing, Sales, and Marketing). This approach would help break down information silos and identify actual demand/consumption patterns: cost per employee, cost per process, per distribution channel, per customer, etc.
- Enrich data with external sources, from suppliers (such as supplier inventory integration), customers (identifying cost-generating customer profiles), or third parties (raw material prices and supplier certifications).
Big Data integration and analytics provide a high degree of visibility and transparency. Managers who leverage them will be confident in negotiations and better prepared to face internal challenges. Over time, Big Data will also shed new light on procurement strategy development.
For procurement, the challenges are:
- Developing and maintaining specialized analytical capabilities, possessed by a small number of individuals and usually found outside procurement.
- Moving from merely aggregating required data to leverage large volumes of data, toward developing advanced analytical learning models in order to uncover insights inaccessible through standard analysis (relationships/correlations), and also make reliable predictions.
- Strengthening the ability to integrate with other corporate functions to access data, and engaging the IT department in complex data integration projects and the development of advanced analytical solutions.
- Managing regulatory implications of data governance, such as the European GDPR (General Data Protection Regulation), which came into effect in May 2018 and should help create a harmonized framework out of the multiple national laws currently in force.
- Ultimately, the historical activities and practices of buyers will be transformed. Procurement must once again act as a true agent of change, but this time focused on itself.
