The Solutions and Opportunities Provided by Data and Analytics

Editor’s note: The first article in this series — detailing responsibilities of the CPO and executive team, as well as how technological trends, talent management and data integration are core enablers of effective analytics — can be read here.

Market intelligence data plays a crucial role by revealing external factors that influence procurement decisions. This includes monitoring price trends, market conditions and competitor activities to inform strategic sourcing and negotiation strategies.

Integrating internal financial data, such as budget allocations, expenditure reports and cost savings with external benchmarks and industry standards helps to contextualize performance and identify areas for improvement.

Yet again, maintaining data synergy across disparate data sets is a challenge that often inhibits leadership from getting the necessary answers. One client in the food and beverages industry struggled with this issue. While market intelligence was plentiful for each of the category teams, this data was not integrated into centralized tools, nor was it merged with the spend cube in any capacity. At the same time, the category teams lacked the extensive training required to capitalize on such data.

We advised this client with a recommended technology stack to ensure a single access point and detailed a revised operational model to bridge knowledge and skill gaps. With such changes, the organization was more primed to achieve the synergy required to make full use of the market intelligence at its disposal. This is one of many ways to empower better decision-making from the top-down.

Handling End-to-End Data Flows

Analytics solutions can save valuable time and facilitate quicker, more agile decision-making for leadership. These solutions can be built on a combination of procurement transaction data, supplier performance data, market intelligence and internal financial data.

A key solution is a spend analysis dashboard or executive dashboard, which categorizes and evaluates all procurement expenditures to identify cost-saving opportunities and ensure compliance with budgetary constraints. Through aggregation of (1) diverse data sources, (2) data cleansing and enrichment and (3) data visualization, this solution provides insights into high-level spend patterns, allowing the CPO to oversee procurement strategy.

Through regular refreshes of dashboards, users are able to extract insights closer to real-time than ever before. With rising availability and efficiency of chatbots and AI-infused solutions, querying for data points and identifying trends is another way that users can provide insights to leadership in a more timely manner.

Predictive analytics and machine learning algorithms can further elevate analytics use cases by forecasting procurement trends and optimizing supplier negotiations. By leveraging these advanced analytics tools and practices, CPOs can significantly improve procurement efficiency, achieve substantial cost savings and ensure strategic alignment with overall business goals. For instance, algorithms can improve tail spend management by automatically highlighting reduction opportunities over time.

Often Overlooked Areas

Beyond implementation of new technology, additional opportunities lie in tapping into data that exists but is not being leveraged. An example is dark data, sitting in data lakes and repositories, often in large volumes, and underutilized for analysis. Such often-forgotten data types as app data and retired databases could uncover additional insights, and savvy data users will search for dark data and assess the potential value-add.

Also related to disjointed data, shadow business intelligence work often occurs when frustrated employees abandon existing business intelligence (BI) tools and instead opt to use a preferred tool for their reporting and analysis, such as Microsoft Excel or Tableau.

While effective in the short-term, the utilization of siloed data through shadow BI can pose security or compliance risks and even undermine an organization’s decision-making as individuals operate under different sources of truth.

Data users and procurement leadership alike should be aware of these risks, define a clear strategy for data management, and enforce a single source of truth to fuel their decision-making.

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The performance of CPOs and executive teams is inextricably linked to the data modelling, visualization and analytics presented to them. By integrating comprehensive data sources and employing advanced analytics tools and strategies, leadership can make better procurement decisions that drive incremental cost savings and operational efficiency.

This approach not only enables strategic supplier relationship management, but also ensures compliance with regulatory requirements and industry standards. Ultimately, strategic data analytics empower CPOs and their teams to sustain competitive advantage in a data-driven world.

(Photo credit: Gett Images/Skynesher)