It’s all good having data, but what do you do with it?
Is it clean, or just dirty?
Fairmarkit’s guide on procurement data looks at how teams can utilise data to their advantage, compared to teams who are already doing that and reaping the benefits through higher savings and higher EBITDA contribution (figure 1). Having data is helpful when making careful, strategic decisions for your company, but many procurement teams don’t know where to start.
‘90% of all data in the world was created in just the last 2 years’
Data can often come back dirty when collected, but there are tools to help clean it up including blockchain technologies, AI, ML and Robotic Process Automation to prevent teams from going through it manually. How it is then leveraged depends on a procurement team’s maturity level, according to Nikesh Parekh, CEO and Co-Founder of Suplari, an AI-driven platform helping companies manage supplier risk. He breaks this down into 3 levels:
Level 1 – the data amateurs
Just managing the process
Level 2 – medium-maturity data users
Use data to drive better negotiations and work strategically to achieve budget and forecast cost savings and risk mitigation
Level 3 – digitally mature teams
They examine market data and partners closely with their suppliers to bring new products to market and drive the top line of business
‘Around 20% of procurement teams are truly strategic, able to leverage data to partner closely with suppliers and provide strategic guidance to the wider company’
Nikesh Parekh, CEO and Co-Founder of Suplari
It is then up to these teams to prioritise and predict future needs of the company, such as focusing on sourcing efforts and areas of most value. Data can be used to drive efficiency and results, as long as it is used in the right way. However, this is still a task for teams still using manual processes instead of using digital tech and (clean) data to their advantage.
‘Digital technology will revolutionise procurement over the next 3-5 years’
Having good data in procurement teams pays off (figure.1), especially if your team becomes a master of data. Parekh continues, revealing ‘Data is a language’ that teams need to be fluent in it if they want to derive the most value for their team and business: that way, data will continue to transform procurement.
‘Advanced technologies can drive improvements in analytics and automation, leading to more than 50% visibility in spend.’
Many companies are going through transitions of digitisation and digital transformations so it is vital to have the right processes in place to elevate a team’s digital maturity, make strategic decisions and use data effectively. For example, data can help award supplier contracts instead of picking the lowest price; identify changes in supply and demand, purchasing and eliminate waste and errors; better monitoring of spend. Additionally, data can show teams how it is connected to different parties in the supply chain and its other processes eg suppliers, manufacturing, distribution, customers and competitors.
- Data is helpful – when you have the right tools to clean it up and use it effectively
- What is your team’s digital maturity? Elevate it!
- Use effective tools with your data
- Clean up your data
- Use it well – gain visibility into your supply chain and beyond