You know processes for identifying needed goods and services, finding and evaluating suppliers, and negotiating and managing contracts.
But have you discovered the power of procurement analytics?
If not, you’re missing one of the most effective ways to maximize processes and position your organization for greater success.
Read on for a brief introduction to data analytics, how they can help you assess and improve your processes, and procurement analytics solutions for getting the greatest possible return on your spend.
“Scooping Up” and Studying Raw Data: Data Analytics 101
Imagine a homemade ice cream shop. Like any business, it relies on both direct and indirect procurement.
It needs to acquire raw materials, supplies, and goods—milk, sugar, eggs, flavored syrups, fruits, and so on—to achieve its main business goals. And it needs services, supplies, and products—industrial freezers, a commercial floor scrubber, or a subscription to a customer relationship management (CRM) platform—that indirectly aid those goals.
But imagine our ice cream shop wants to improve its procurement processes. To do so, it turns to data analytics.
Data analytics is the practice of turning raw data into useful information from which businesses can draw practical, profitable conclusions.
Businesses use four main kinds of data analytics:
1. Descriptive Analytics
These most basic, essential analytics describe what happened.
Our ice cream shop’s descriptive analytics might show sales surging in summer but falling off in winter.
2. Diagnostic Analytics
These analytics attempt to explain what happened.
Our ice cream shop’s diagnostic analytics might show a correlation between those rising summer sales and rising summer temperatures.
3. Predictive Analytics
These analytics help businesses predict what might happen.
Our ice cream shop might notice a general trend toward decreased ice cream shop revenue in winter. It may reasonably predict that, absent any adaptation or innovation, next winter’s sales will be slow.
4. Prescriptive Analytics
These analytics help businesses decide what to do next.
Our ice cream shop might decide to try to “cure” sluggish winter sales by creating an elaborate “Snowstorm Sundae” available only in the winter months—or it might decide to close until warmer weather returns.
This ice cream shop example is simple. But it shows how businesses using data analytics can “scoop up” information to gain actionable insights.
Data analytics aren’t confined to retail enterprises. A wide variety of fields—including marketing, health care, manufacturing, transportation, logistics, and others—analyzes data.
What is Procurement Analytics?
Procurement analytics is the application of data analytics in the field of procurement. The goal? Better informed, bolder data-driven decisions.
It involves tracking and analyzing a wide range of data points—spend data, supplier performance data, contract data, and more.
Analytics can empower procurement teams to:
- Increase processes’ accuracy and timeliness
- Improve procurement spend visibility
- Optimize sourcing strategies
- Identify inefficient spending and opportunities for cost reduction
- Enhance relationships with suppliers, from contract negotiation and management to post-transaction evaluations
- Lower the risk of fraud and abuse in procurement processes
How Procurement Analytics Solutions Can Benefit Your Program
In the past, gathering the raw data needed for analytics and gleaning actionable insights from it has been time-consuming and challenging.
Today, software like Oracle Advanced Supply Chain Planning Suite (ASCP) or SAP Ariba makes data analytics much easier and faster. But properly implementing such systems still requires significant investments of time and money.
As a result, many organizations use external resources for procurement analysis through suppliers or logistics providers until they’ve built infrastructure for a sustainable internal solution.
CenterPoint Group can help your procurement team collect, evaluate, and act on your organization’s purchasing analytics, spend analytics, and more.
As part of our comprehensive approach to group purchasing, we’ll take on your analytical heavy lifting for you. The procurement analytics we provide give the visibility you need to make smarter, stronger decisions about:
- Finding the best suppliers and prices in real time to achieve more strategic sourcing
- Implementing your supplier diversity initiatives
- Giving your company major competitive advantages by saving time, money, and resources
Do you want to know how CenterPoint Group, a modern and leading GPO, can help you build and maintain stronger procurement processes? Contact us online or call us at (866) 229-6205.