Data is critical to a well-oiled procurement function but its utilisation (or lack of) leaves much to be desired and is a significant opportunity for value creation.
A lot of procurement professionals are happy with their supplier data and its quality, but many could be overlooking potential underlying issues and creating a false sense of security.
In order to ensure supplier data is of the highest quality, procurement must embrace a ‘master data management approach’. This is because the data quality is critical. It’s good to have data from suppliers but if this data is of poor quality, it can often do more harm than good to the organization. A master data management approach allows procurement to ensure their data is accurate, consistent and uniform.
‘One organisation I worked for had three data centres and was
buying IT equipment from three different suppliers.
People want to control their domain and don’t realise the benefits of centralising supplier information’
Cyril Law, director of technology and data engineering at Engine Transformation
Being able to take ownership of supplier data as a procurement function is a big step towards achieving good data management. Instead of having supplier data management and ownership spread across the business which is what 87% of respondents to the HICX survey reported, best practice would be to create a unified approach with a single environment to interact with and manage the data.
With the help of the COVID pandemic, data’s importance within an organisation is being increasingly recognised but one of the main obstacles still remains as company culture and the attitude towards data. Improving priorities for data is important: the HICX survey stated that 62% of procurement leaders felt data projects have been given lower priority than other projects. By changing this cultural norm, an organization can much better utilise data and move to embrace it within their decision making.
‘Compare a florist and a uranium miner.
Both supply an energy supplier-customer, but they don’t need the
same level of compliance and risk assessment’
Costas Xyloyiannis, CEO of HICX
One of the core benefits of data has been highlighted recently with COVID. A lot of organizations felt their response to the risks posed by COVID were poor. Strong supplier data has the capability to help firms better manage their risks as the data can provide insights about how their suppliers may respond to risk and change which can allow the organization to build in safeguarding into their processes.
A great way of fostering a culture of supplier data is to embrace it the second a supplier begins onboarding, by integrating it at this stage, procurement is able to boost quality, cut spending and seize a range of other benefits.
- 89% of organizations say they do not have total oversight into their suppliers
- 62% of organizations said the top blocker holding their business back from data excellence was the fact that the project fails to make the cut in terms of priorities compared with other initiatives
- 60% said increased efficiency was one of the top 3 benefits of strong supplier data management
- 58% said the top blocker to data excellence was a perceived lack of return on investment