Before big data analytics there was just data, where procurement organizations complied mainly internal, structured data from transactions. Today, big data analytics has expanded the sources of data to include much more incongruous set of both internal and external, structured and unstructured data obtained from automated processes executed within hours, or in many cases, in real time. Analytics helps tie together internal and external data sources; for that reason the first step for procurement in using big data analytics should be to tie in the internal data sources such as spend data, contract data and SRM data, with external sources such as the Internet, supplier databases and various news feeds in order to have “anytime, anywhere” information about supplier markets.
Though, understanding big data analytics and transitioning to this idea may propose some challenges, the potential to gain valuable, detailed and competitive insights about market conditions can bring great value to procurement. A few specific areas where procurement can gain additional value and drive their procurement practice to the next level includes:
Spend data has really become the bread and butter of procurement for some time now, but big data analytics can bring a new meaning to spend data analytics. Implementing a successful data solution will not only enable a greater number of data sets for a more detailed analysis, but will allow for the filtration of mass data into meaningful and actionable insight. In result, spend analysis becomes more than simply delivering metrics, but identify trends, performance improvements and implementing fact based decision making.
Supplier selection and management can be a difficult task for procurement. At times, it is difficult to know who the most efficient supplier may be, or who is currently providing the best quality service and can bring new innovation to the table. With big data analytics, this information will be assessable at hand through an analysis of internal and external data sets from non-conformance reports, to customer complaints, or delivery trackers…the list is endless. Having this information at hand when selecting a new supplier, or renewing a contract with an incumbent supplier could be priceless and bring additional leverage during negotiations.
The greatest opportunity for procurement lies in the ability to accurately forecast and run predictive analytics. A comprehensive analysis of the market could help accurately predict the direction of certain markets and allow procurement to adapt strategies accordingly. Though, the real value of a big data solution is the ability for data to be collected and analyzed in real time, meaning that as the market evolves, the dataset will reflect any market changes as well.
The value of big data analytics can bring transformative changes to procurement and allow for more informed decisions to be made when it comes to spend, market conditions and managing suppliers. It is clear that procurement should take advantage of big data analytics and begin developing a solution to effectively transition in order to drive their procurement practice to the next level.