The 21st century has come to data analysis : in procurement as well ?

January 11, 2017

Do you know the Big Data concept ? It is probable that by now, you've heard of it. This is a set of techniques that allow to convert millions of data into information and this, in turn, into knowledge. A knowledge that allows you to discover, for example, repetitive patterns within these datas. It is used in medicine, traffic management, marketing, and in many other fields.

 

What is the relationship between Big Data and  procurement ?

 

The relationship is the difference that does exist between the technical capabilities of system analysis today, and the level of quality of information with which we work, in general, in our environment. In fact, Procurement Managers (whatever the position) face a lot of difficulties to simply follow the spend of a corporate category in detail. To this day, MS Excel remains the main tool for this, and, in my opinion, it is not very effective.

 

Many large and medium-size companies work with highly efficient IT systems for their production, supply chain management or their finances, but they lack, in many cases, robust and agile tools to track their external spend (Telecom, Transport, Business travel, MRO, speaking only of some indirect categories).

Why do we still see situations in which a Category Manager must invest a lot of time or even, sometimes, rely on the information of its vendors, to get a clear vision of the spend of its category ?

If this might not be so true in direct costs, it is especially the case when we talk about indirect costs.

 

The consequences of this situation are critical to my point of view. Obviously, because procurement managers spend a lot of time managing this data collection. This leads to a loss of business opportunities and skills : they cannot focus on finding the future goods and services they need. Also, because they have sometimes to claim the data to their vendors, those one ending up co-managing the categories : they set the deadline and the level of detail of the data that they deliver. And even more important : it will be difficult to attract “digital natives” profiles in the field of procurement, if we can only offer them to work with outdated tools.

 

What may be the reasons of this situation ?

I do not think it's just about cost because compared to other IT systems, such as an ERP, a spend analysis tool is much cheaper.

Here are some points to reflect on:

1) procurement are not yet as well recognized as we would like. No matter what we write, what we read ..., when organizations leave their procurement departments basically working with MS Excel files and emails to consolidate and re-consolidate figures, data, cases ... We can therefore think of a certain lack of recognition;

2) the lack of time, since a lot of time is invested in activities without great added value ;

 

There are many services and tools in the market to support procurement departments in this regard. In any case, it is urgent to provide them with spend analysis tools adapted to their needs. Only that way a procurement “transformation” project can be successfully achieved.

Changing the organization, strengthening category management, deploying SRM, innovating with suppliers, are strategic goals, but do not let procurement managers rely on emails, phone conversations and MS Excel sheets to manage their spend. If so, the much-desired transformation will not bring the expected results.

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