Procurement team needs the appropriate data at their disposal at all times in order to do their job efficiently. Usually the relevant data is with the respective people in the organization, either in their diaries, laptops, and desktops or even in their minds.
Imagine a situation, when this data is lost or the same person has to leave the company. That is why, it is important to have a proper process around capturing the data, updating the data and final dissemination of the data. As far as strategic sourcing is concerned, many mature procurement organizations have perfected that art. So the next big thing on everybody’s minds as far as procurement is concerned is the Big Data Analytics, which has become the buzzword for businesses across the globe. At the same time it’s also a matter of wonder for procurement professionals as to what is the fuss behind the term known as ‘Big Data’. The procurement function, since eternities have always been dealing with large amounts of data. The rationale behind this fact is that spend data analytics is considered the bread and butter or the foundation of the procurement function.
Spend data analytics is the basis of all the strategic value addition efforts that go on at the side of procurement. So what is possible reason amongst the procurement community that they have been so late in embracing big data?
The answer to this pertinent question lies in the way businesses around the world perceive big data. When one reads about big data these days, the feeling is that of the story of an elephant and the blind man. Basically every function and every individual has their own perception of what constitutes the big data analytics.
However there are some concurrences to the fact that big data analytics is largely being able to manage the three Vs- Volume, Variety and Velocity of data, meaning to analyze and provide meaningful insights to businesses based on the available data and sources of information.
For the procurement professionals, the first step in the process of embracing the philosophy of big data analytics is about connecting the internal data sources such spend, contract and supplier data with the external data sources. These include the supplier ratings, news feeds, market insights through primary and secondary research etc. Procurement professionals have to be able to realize the fact that strategic sourcing is now a given task, which is expected of them, and so for them to be able to stay relevant in the organizational scheme of things, they have to be able to answer the questions like:
How will I be able to identify the suppliers who are risky to my business?
What are the early signs to capture and how to mitigate such risks?
How will a cyclone impact the demand for the input raw materials?
Can data analytics on the consumer behavior patterns help me to plan the spot buys for my product in a better way?
While it is good to think of the scenario where data analytics can answer these questions, it is also important to understand that at the end of the day, the outcome of any data analytics process depends on the quality of the input data and the answers we can infer from it. What is most important is that we should have a good understanding of both the qualitative and the quantitative data sources to be utilized for our analysis, since we are going to get the quality insights solely based on the quality of the data sources.