Data and Analytics for CPOs and Executive Teams

In today’s digitally driven business landscape, procurement plays a critical role in driving organizational success. As key stakeholders in the procurement process, CPOs and executive teams are responsible for making strategic decisions that impact the bottom line.

With the increasing importance of data-driven insights, they must leverage analytics and tool kits to optimize procurement operations, mitigate risks and uncover new opportunities for growth. By harnessing the power of data analytics, these leaders can drive business value, improve operational efficiency, and stay ahead of the competition.

At a high level, their aim is to develop and implement procurement strategies that align with organizational goals and ensure business continuity. In working with clients, we’ve observed how procurement leadership cannot possibly be tuned into the fine details of all procurement activities to achieve this large-scale objective.

Rather, CPOs and executive teams rely on their teams for reporting and analytics to inform optimal decision-making across a multitude of areas, including:

• Managing complex global supply chains and associated risks
• Maintaining supplier relationships, developing contracts and overseeing spend
• Ensuring compliance with regulatory requirements
• Making purchasing decisions based on market trends
• Collaborating with cross-functional teams to drive process improvement.

Tech Opportunities

To manage such responsibilities, procurement leadership must stay up to date on emerging trends and technologies. This includes identifying opportunities for digital transformation through digital procurement platforms and artificial intelligence (AI), which is indispensable for staying competitive within the market.

Furthermore, CPOs are always looking for ways to assess current performance and hit targets and benchmarks. By leveraging analytics and tool kits, CPOs and executive teams can gain greater visibility into procurement operations, make data-driven decisions, and drive business success.

Data models and algorithms can identify opportunities to hit budgetary goals: Cost avoidance, sourcing savings, supplier payment terms optimization and tail spend analytics are examples where advanced data science can uncover opportunities that align with a procurement organization’s strategic vision.

Managing Talent

Procurement leaders depend on their teams’ data skills to improve business performance. Organizations are collecting more data than ever before. Unstructured and structured forms of such data types as sustainability metrics, ethical sourcing data, supplier diversity, and geopolitical and weather-related risks are becoming the norm.

To accommodate this surplus of data collection, data scientists and data analysts are highly valued within procurement organizations. However, data literacy and data skills are increasingly in demand for the average role (not just data specialists).

To compete with market rivals, procurement teams must stay up to date with best-in-class practices. Agile team members — those who can quickly pivot in a rapidly changing environment and develop new skills — will be more valued by leadership in a progressively digital world.

Data Integration

To develop robust analytics solutions for a CPO and the executive team, several critical data sources are necessary. Procurement transaction data is at the core of this, providing details on supplier invoices, POs, contract and payment terms, and transaction histories. This data is invaluable for tracking spend patterns and ensuring compliance with procurement policies.

Supplier performance data is also beneficial, capturing key metrics on delivery times, product quality, service levels and contract adherence, all of which allow for successful supplier relationship management.

In a best-in-class scenario, complementary data sets are integrated to provide a comprehensive view of procurement operations. Additional data from enterprise resource planning (ERP) systems; customer relationship management (CRM) platforms; contract management systems; environmental, social and governance (ESG) platforms; and supply chain management software enhance leadership’s view of the procurement organization.

The challenge lies in maintaining synergy across these data sets, which depends on a teams’ ability to manipulate and merge multiple data types. Often, there is a need for aggregating 10 or more data sources stemming from various systems and spanning both structured and unstructured data.

However, once successfully unified, the resulting data set can empower CPOs and their teams to make informed, data-driven decisions that optimize procurement strategies, enhance operational efficiency and drive cost savings.

Part 2, featured in next week’s newsletter, will delve deeper into the topic of maintaining data synergy and explore analytics solutions to unlock better insights for procurement leadership.

(Image credit: Getty Images/Evorona)