Tag Archives: big data in procurement

Procurement 101: Why We Need Data Analytics

Do you want to leverage big data in procurement but are unsure how to article the benefits? Here are four ways data analytics is changing the procurement profession.
 

1. Supply Chains Will Be More Transparent

Data analytics will make it possible to have visibility of more factors than humans could ever analyse on their own. With customers demanding the country of origin and the practices surrounding the acquisition of everything in the products they buy, data can help track products through the supply chain. Additionally, procurement professionals can find ideal suppliers with predictive data. Doing so will make it easier for products to adhere to a specific code of ethics throughout the supply chain.

2. Risk Focus Will Shift

As more information trickles through the supply chain, the timeline of risk will shrink. With more visibility, you’ll be able to concentrate on immediate disruptions in the supply chain and respond to those.

Tracking weather, traffic conditions and other disruptions that could affect your supply chain will allows for more rapid adjustments, which will in turn lead to fewer disruptions in the supply chain and of the business. Planning for these factors becomes easier with data analytics that can juggle far more pieces of information than humans can.

3. Procurement Professionals Will Become Knowledge Leaders

The information procurement professionals will use will make them knowledge leaders for the entire company. For cost savings, the data used in procurement will be invaluable. To take one example, a commercially sold multivariable freight optimisation program saved one industrial company 25 per cent on its air freight costs. The marketing department may consult with the information procurement professionals gather from social media to determine demand.

4. Automation in the Supply Chain Will Gather Pace

The Internet of Things (IoT), which combines sensors and data analytics, will ramp up automation in the supply chain. Automation will ease the supply management professional’s job, as much of the ordering becomes part of the system. Sensors on store shelves can measure how fast a product is selling, then alert the manufacturer to adjust the amount to deliver to individual stores — or even the total number of products to produce. The head of JDA Labs, an operations planning software company, describes big data and sensors as answering manufacturers’ demands for product placement information. The sensors show where stores place products on their shelves, and informing manufacturers of their product placement is the first step toward automation of meeting consumer demands.

Implementing Data Analytics for Procurement

Walter Charles, CPO of Biogen, advises companies to include data analytics in their processes and claims businesses do not need a large team of scientists. All they need are a category manager and a group of six to 10 people who know how to use the software to examine bids.

Charles used such a team to work with $12 billion when he was at Kraft Foods and had a similar group for $10 billion in work at Kellogg’s. Ernst & Young, EY, suggests the team members know how to work with quantitative data since quantitative risk management will become a critical part of procurement. With the right people and software, you can make data analytics a reality for your business.

Analytics will make use of unexpected data. Ernst & Young predicts that by 2025 social media, mobile technology, big data and the cloud will be the primary sources for data analytics in procurement. Analysing this information will be necessary with the right software and people to unpack it.

Security and Big Data

Part of using shared information in the cloud and big data will be keeping the information and your company secure. You cannot ignore the problem, so make sure you always have updated virus screening software. Additionally, keep a firewall for your business. When in doubt, hire a trusted IT security professional to keep your information secure.

Is Data Analytics the Future of Procurement?

Data analytics will become an integral part of the future of procurement and the supply chain. If you don’t start the process of implementing it in your operations today, you could be behind tomorrow. The information from this process will save you money and make your business more efficient. Data analytics is one investment where the ROI will continue to benefit your business for years.

6 Ways Procurement Pros Can Dominate Their Data Strategy

Building a nimble process, speaking the right language and gathering your data from the right sources will have you nailing a flawless data strategy in no time!

When most procurement professionals think about data they imagine a darkened back-office room and a huddled group of silently-working number crunchers.

But it’s data that gives your organisation’s senior leaders the most important insights, helping them to win new business.

Data can help procurement climb up the value chain and earn you a seat at the table.

If could only change the time we spend gathering data and the time spent actually using it  from a 80/20 split to a 20/80 split, its potential is limitless.

And this is a mistake procurement makes too often.

Ahead of today’s webinar Basic Instinct: Are You a Data Hunter or Gatherer, we’ve outlined some top advice from data experts; Marco Romano, Procurement Chief Analytics Officer, Global Procurement, Transformation Technology – IBM and Edward D. O’Donnell, Chief Data Officer for Procurement – IBM, on how to dominate your data!

1.Build a nimble process

Ed has, in his own words, enjoyed ten years working in transformation but admits he has made plenty of mistakes along the way! His advice? “If you’re going to fail. Fail early.”

As he points out, making mistakes is not the problem, it’s the way it’s done that makes all the difference, “The most significant challenge [for procurement pros] is managing data of all size and scale.”

In the past, IBM have approached this challenge with the old-school  waterfall methodology; the development team is engaged and a plan is might be made and executed with care over the course of a year.

“It’s smarter if you can do it in more agile chunks,” explains Ed.  “The drops are not quarterly or annually for the big bang but rather maybe in weeks we’ll run sprints.”

“This allows smaller, more manageable content.” Which, of course makes a lot of sense. Why spend a whole load of money to wait for the last two months of the year to realise the value?  “Can’t we build a process thats more more iterative, more nimble, more flexible more agile?”

“Then, of course, if the client doesn’t like it we can get immediate feedback and correct it straight away.”

2. Use your time more wisely

Procurement pros have, for too long, been gathering data from too many sources because that’s what they think they should be doing. It’s time consuming and, often, it’s also futile.

“So much time spent is spent gathering data. Procurement pros need to start at the end and work backwards. First and foremost you need to ask what’s the outcome or insight you’re trying to achieve and what are the business behaviours you’re trying to change.”

Develop a joint understanding of business requirements. From that you work backwards to determine three things:

1. What data you need

2. How you acquire  it

3. What enrichment that data needs

In doing this “you’re not only gathering data that’s fit for purpose, you’re also considering business process that drives that data and building improvements into this process to ensure data quality and data consistency.”

“Of course it doesn’t stop there our role is to automate that takes gathering filtering, sorting data away from practitioners

Ideally we don’t want our practitioners spending time analysing or shipping raw data rather looking at results or process insights. but spending time

So what drives this behaviour off trying to get all sorts of data?

It’s driven by wrong metrics or misunderstanding of those metrics.

“You absolutely have to make sure you measure what really matters, such that you drive the right behaviours in data acquisition and move away from concept where people are just acquiring a whole lot of data and not able to put it to good use or understand why they’re acquiring in the first place.”

3. Gather your data from the right sources

IBM source their data from a wide variety of sources.

“We look at RFX data, procurement and customer contracts, internal client demand and pipeline data,” explains Marco.  “Internally it’s a very broad base of data which includes procurement and our clients.”

They use “market intelligence from MI providers as well as MI from structured and unstructured public data sources, social media and various other sources.”

“The data we get from suppliers  is really important and includes things like machine failure rates, product life-cycles [and ]configuration options.”

“It’s a broad base but it’s not about gathering all of that data but rather targeted to achieve a specific objective.”

Do IBM have a particularly ‘hot’ data source? “Not so much the hot data source” says Ed. “It’s the way you use that data!”

“assembling the data in a coherent way where the buyers can have it at their fingertips – assembling quickly, linking the data and then presenting it to the buyer in a new user experience is where the power comes from.”

4. Listen to your client

“Listen to the voice of the client” says Marco.

“Start with an understanding of what you’re trying to solve, really understand what the practitioners needs are and work backwards from there to figure out what you really need”

Set up engagement meetings, engage with the client regularly and continuously share and showcase your work with your internal team.

5. Focus on data quality

“Focus on data quality and ensure that your procurement processes enable the acquisition and enrichment of good quality data,” says Marco

“It sounds very obvious but it is so often overlooked and it causes tremendous frustration in the system.”

6. Speak the same language

Spending more time in front of our customers or clients and less time behind closed doors, simply gathering and analysing data, is crucial.

When procurement teams start a program it’s important that everyone is on the same page; speaking the same language and communicating regularly with all the key stakeholders.

“One of the things historically that the procurement practitioner hasn’t done so well is being completely transparent with the data,” explains Ed.

It’s important to present it in a way that “it’s clear and simple to understand [and so] that the outcomes are obvious. The best chart is one you don’t have to try to understand, where the messages are clear.”

If you’re referring to units per hour, what do you mean by units?

If you use the term FTE, does everyone know what exactly that represents? Is it a 40 hour week at x cost or a 35 hour week at y cost?

Our webinar,  Basic Instinct: Are You a Data Hunter or Gatherer takes place at 1pm BST TODAY . Register your attendance for FREE here. 

Are You A Data Hunter Or A Gatherer?

Are you trying to stay afloat  in a huge “data lake”?  Trust us, there are better ways to manage and manipulate your data to make an impact. Are you a data hunter or a gatherer?

ArtMari/Shutterstock.com

There’s a whole lot more to data than simply having it…

If you’re one of those procurement professionals who’s anxiously sitting on an ever-growing mountain of data, wondering how on earth to make sense of it all; it’s time to shift your mind-set and your approach from gatherer to hunter….

Data on its own means very little unless it’s actually actionable.

But procurement professionals are so used to a deluge of data that it often ends up discarded in someone’s top drawer, never to be seen again! Perhaps it’s not fit for purpose but one thing’s for sure – nothing useful is done with it!

Can procurement teams do a better job in ensuring they get a decent ROI on their data?

Our latest webinar with IBM, which takes place on 28th March, will teach you how to become an astute data hunter!

We’ll be discussing…

  • Why every procurement team needs a Chief Data Officer
  • Unstructured data – How do you make sense of it all?
  • How to make sure your data is fit for purpose and get an ROI on your data investments
  • The biggest mistakes Procurement teams make when it comes to data and analytics?

Webinar Speakers

 Edward D. O’Donnell, Chief Data Officer for Procurement – IBM

Edward is IBM’s Global Procurement Data Officer and charged with the mission to advance Business, Intelligence, Deep Analytics, and Cognitive functionality across the procurement portfolio.

Marco Romano, Procurement Chief Analytics Officer, Global Procurement, Transformation Technology – IBM

Marco applies more than 15 years of experience as a procurement practitioner and project manager to understand complex environments that separate the noise from real issues and determine near-term and strategic solutions in realising business value. He leads a team that has saved IBM Procurement a significant amount in third-party costs and efficiencies through analytics data solutions and innovative sourcing strategies over the past three years. His team is also developing commercial analytics and cognitive procurement offerings leveraging data and technology for IBM clients’ competitive advantage.

 Tania Seary, Founder – Procurious

A true procurement entrepreneur, Tania is the Founding Chairman of Procurious, The Faculty and The Source. Throughout her career, Tania has been wholly committed to raising the profile of the procurement profession and connecting its leaders.

After finishing her MBA at Pennsylvania State University, Tania became one of Alcoa’s first global commodity managers.

In 2016, Tania was recognised by IBM as a #NewWaytoEngage Futurist and named “Influencer of the Year” by Supply Chain Dive. She hosts regular procurement webinars, and presents at high-profile events around the world.

How do I register for the webinar?

Registering for our webinar couldn’t be easier (and, of course, it’s FREE!)

Click here to enter your details and confirm your attendance. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

I’m already a member of Procurious, do I still need to register?

Yes! If you are already a member of Procurious you must still register to access the webinar via this platform. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

When is it taking place?

The webinar will take place at 1pm BST on 28th March 2018

Help! I can’t make it to the live-stream

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask a question?

If you’re listening live, our speakers would love to hear your questions and we’d love for you to pick their brains . Questions can be submitted throughout the live stream via the webinar platform.

If you think of a brilliant question after the event, feel free to submit your question via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Our webinar,  Basic Instinct: Are You a Data Hunter or Gatherer takes place at 1pm BST on 28th March 2018. Register your attendance for FREE here. 

How Big Data Insights are Revolutionising Global Procurement Strategy

More companies than ever are using Big Data insights to drive their decision making. But what key benefits are they realising by doing so?

This article was originally published on My Purchasing Center.

Advances in technology are making it possible to generate more data than ever before. We can quantify, measure and track every interaction, transaction and engagement in excruciating detail.

And when we collect these “big data,” we can gain tremendous insights into business processes, including global procurement strategy.

Because global procurement is focused entirely around obtaining greater efficiencies and streamlining purchasing operations, global procurement is primed to be revolutionised by the insights that stem from big data.

Businesses that collect big data insights are finding that they can refine global procurement strategies and processes with greater precision than ever before. They also can intervene more effectively to resolve problems and challenges, and they can use concrete data instead of intuition and instinct to accomplish this work.

One study by the Massachusetts Institute of Technology’s Sloan School of Management, finds that among companies in the top third within their industry, the use of data-driven decision-making made a company 5 per cent more productive and 6 per cent more profitable than a company that didn’t use data-driven decision-making.

Let’s explore the specific ways that big data insights are revolutionising the global procurement industry:

Shorten order-to-delivery times

Traditionally, the procurement timeline has been based largely on individuals using their best judgment and insider knowledge to get the right products and resources to the right place at the right time.

No matter how talented people are, however, they’re often no match for a computer algorithm that is specifically designed to optimise timelines and manage all aspects of the ordering and delivery process.

Computer-based analytics also can adapt to changing conditions in real time, ensuring that no matter what happens, nothing will slip through the cracks, and order-to-delivery times will continue to be optimised.

Increase supply chain efficiency

As with managing a procurement timeline, individual people can only manage a supply chain as efficiently as the human brain will allow.

Analytics software goes past the limitations of the human brain, processing and interpreting more data points about a supply chain than anyone’s brain could possibly synthesise.

In the end, these big-data insights yield more precise predictions about how to optimise the supply chain – and better predictions yield better decisions.

Lower costs

The goal of global procurement is to achieve cost savings, so it makes perfect sense to use big data insights to optimise all opportunities to lower costs.

Analytics software can instantaneously and accurately compute more possible combinations of events and items and scenarios than any human brain could, and computers can also thus make the “sweet spot” recommendation that appropriately balances all of these competing factors.

Improve supplier-client relationships

Both the supplier and the procurement client benefit from big-data insights. The supplier gets access to invaluable information that helps the supplier more effectively allocate its resources, as well as make plans to deliver on time and on budget.

The client benefits by no longer being forced to actively manage every aspect of the procurement process. Rather, a computer-based management approach frees the client to focus on building and enhancing relationships with suppliers, and on developing creative, out-of-the-box solutions that further enhance procurement processes.

Eliminate arbitrary decision-making

As much as businesses like to think their managers are making sound decisions, some will inevitably make decisions based on emotion, gut instinct, and self-interest.

Big data insights dramatically reduce the chances of this by forcing managers to not only use data-driven analytics to make decisions, but also to be prepared to defend those decisions.

As more businesses turn to big data insights to drive global procurement strategy, it’s important to provide adequate resources to support this transition and to provide adequate time for this transition.

When big data insights are integrated effectively into procurement processes, businesses can count on shorter order-to-delivery times, increased supply chain efficiencies, lowered costs, improved supplier-client relationships, and less arbitrary decision-making.

With more than 30 years of experience working with and providing excellent customer service to companies of all sizes, Rick Bender now is the Sales Director at CenterPoint Group.

CenterPoint is a management consulting firm that specialises in reducing purchasing expenses of businesses in areas such as office supplies, janitorial supplies, and industrial supplies.  

The Internet of Things Driving Procurement Change

In the business world, organisations are waking up to the possibilities afforded to them by the Internet of Things, connectivity and Big Data.

The 2015 Gartner CEO and senior business executive survey found that technology-related change was viewed as the primary tool to achieve growth in 2015 and 2016.

37 per cent of respondents to the survey highlighted customer engagement management as a key technology priority, with 32 per cent highlighting digital marketing. Cloud-based business also had high recognition, as CEOs came to realise that the Cloud is where new disruptive industry platforms (think companies like Coupa) get created.

However, on the other side of this were concerns about potentially increasing levels of risk that are seen in line with increased connectivity. 77 per cent of survey respondents agreed that the digital world was creating new risks for businesses. However, 65 per cent also felt that investment in risk management practices was not keeping up with new and higher levels of risk.

Cloud Security – Or a Lack of It

This is a key area for procurement to consider when using Cloud-based technology and Big Data. You’ll all have seen reports and stories in the press about hacking and cyber security problems. This is frequently raised as one of the key issues with moving from traditional systems, to Cloud-based software.

It’s estimated by HP that around 70 million ‘smart’ devices have serious vulnerabilities, including privacy concerns, lack of encryption, inadequate software protection and insecure web interfaces. Worse still is that individuals and organisations either aren’t aware, or don’t have the capability to secure their systems.

The current state of Internet of Things security seems to take all the vulnerabilities from existing spaces, e.g. network security, application security, mobile security, and Internet-connected devices, and combine them into a new (even more insecure) space, which is troubling. 

Internet of Things Driving Change

A number of senior procurement leaders we have spoken to over the past few months have highlighted the potential issues of developing and managing suppliers as we move to operating in an era of the Internet of Things.

The growth of new technology and digitisation of processes mean that traditional procurement methods for managing suppliers need to be changed and updated. While in some cases, long term contracts of 3 years or more may be applicable, but there are certain areas where this cannot be the case.

More than ever, we are actually buying technology more so than the actual product or service. Think about driverless mining trucks – we’re really buying the technology to manage and maintain these vehicles, more so than the trucks themselves.

As technology increasingly becomes the product, we need to keep our options open in order to take advantage of the frenetic pace of change. Our tenders and contracts will need to more broadly define the functionality and utility we require of a product or service, rather than the exacting specifications we know today.

We will also need to ensure we keep our minds, doors and sourcing processes open to engage new suppliers with break-through technologies. Where contracts are 3-5 years long, CPOs will need to build optionality into their contracts to ensure they have the agility and can be opportunistic in adapting and adopting new technologies.

Changing Supplier Engagement

The alternative is to use different supplier engagement processes, potentially dynamic purchasing systems, or supplier panels, or ensuring that you are working closely with the suppliers in order to build innovation into your contracts.

New technologies aren’t necessarily going to be 100 per cent applicable to you, but your suppliers should be able to help with new product development and innovation.

But they will want security in this to know that they are not going to outlay a vast sum of money for development, only for the contract to be taken elsewhere under 3-year procurement processes (where they exist). In this way, Supplier Relationship Management will become even more critical.

4 Ways Procurement Should Be Using Big Data

While it might be a difficult term to define, there are a number of practical applications for using Big Data.

In our previous article, we looked at defining (or rather, not defining) the term ‘Big Data’. Now we are going to explore the potential big data analytics and computing may hold for the procurement function.

There are a number of high-profile ways in which organisations are using Big Data. For example, hospitals and public health organisations are using Google’s search trends and history to predict future outbreaks of the flu and colds. You can read the details here and see the counter argument here.

The application of Big Data in the procurement space is a little less apparent, or at least, less well publicised. With that in mind, we’ve put together four ways that procurement could be using Big Data to its advantage.

1. Understanding supplier risk

By leveraging the vast amounts of unstructured data now available to organisations, procurement teams can get a far better understanding of their key suppliers.

Previously supplier information could be found through the media, suppliers’ websites and personal relationships with the people being bought from. Data mining allows procurement to go much deeper than this and provides an unbiased, opinionated view of their suppliers’ standings.

2. Uncovering new savings

In the same way that harnessing data allows us to understand more about our current suppliers, correctly utilised, it can also help procurement understand more about its supply markets and where it sits within them.

By understanding the global supply market at a more granular level, a whole new set of opportunities to uncover savings is opened up. These savings can come about either through direct pricing improvements or through new innovative solutions.

3. Predicting negative external factors

In the past, Big Data has been used to predict unforeseen weather events with varying degrees of success. However, many organisations and governments are investing heavily in this technology.

These insights and predictions would, understandably, garner strong commercial interest, particularly from procurement teams looking to understand just how exposed their supply chains are to both natural, and man-made, disasters.

4. Opening up collaborative supplier projects

Understanding and using Big Data means understanding a category more clearly. Organisations that are able to get this level of understanding are in a position to open up conversations around innovative solutions.

The critical part of this is that transparent relationships with suppliers must exist first. The companies can then work together to solve problems and benefit from opportunities, even if some of these opportunities are not even visible yet.

In our next article, we’ll be be looking for some real life procurement examples where Big Data has been leveraged successfully. If you know of any great examples, please get in touch.

Big Data will be one of the themes discussed at the Big Ideas Summit on April 21 in London. Tell us your Big Data story and pose questions for our experts on this subject by registering today.