4 Ways Procurement Analytics Can Help Add Real Value to Your Business
In this age of digital intelligence, procurement data is no longer restricted to spend data. Now, data from multiple sources including both internal and external is easily accessible to the procurement team. There is immense opportunity to deploy advanced analytics on this combined data to understand market dynamics, purchasing trends, behaviors of business stakeholder, and […]READ MORE >>
In this age of digital intelligence, procurement data is no longer restricted to spend data. Now, data from multiple sources including both internal and external is easily accessible to the procurement team. There is immense opportunity to deploy advanced analytics on this combined data to understand market dynamics, purchasing trends, behaviors of business stakeholder, and team performance. The derived insights can be used to brace future procurement decisions and drive value for the whole organization. Moreover, today procurement managers need to assess their real position on the ‘analytics value chain’, to get a true picture of where they actually stand. Once they gain clarity on this, actions can be taken to move ahead based on the level of maturity. The analytics experts at Quantzig have identified four metrics through which procurement analytics can help businesses reduce overall cost base and achieve more for less:
How can procurement analytics help your business?
Procurement analytics can help to optimize the working capital. Furthermore, it helps in controlling spend over budget by comparing the purchase order value or the budget with the actual invoicing. Procurement analytics also aids in analyzing “Incoterms” to identify cost-effective opportunities.
#2. Pricing metrics
Procurement analytics helps organizations to understand whether they are paying different prices for a similar service or product across its geographies and divisions. It helps identify price variance by division or geography. Furthermore, it also helps analyze spend or price development to assess whether there is an increase in spending for an SKU or category and if it is resulting in a per unit cost reduction.
#3. Compliance metrics
Procurement analytics helps organizations to identify any variance from the agreed KPIs and defined process. Typically, these cannot be avoided completely but can be definitely controlled as they always come with a higher price point. Moreover, procurement analytics identifies spend from non- preferred and unapproved suppliers. Also, it aids in fraud detection by analyzing factors like spend near approval limits and large spend without a point of sales.
#4. Supplier base metrics
Procurement analytics helps organizations to understand the existing supplier base’s performance and identify opportunities to integrate further by using more global contracts and secure better pricing. Furthermore, procurement analytics helps to analyze the geography or division that has a high supplier base built up over the years. It aids in leveraging the geographic reach of existing suppliers to secure global competitive rates.
If you want to employ robust procurement analytics and uncover better insights from data for better vendor management, negotiation tactics, and purchasing strategy- request a free proposal now!LESS >>