Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Stuart Brocklehurst discusses how procurement can elevate its role by tackling maverick spend.
At the Big Ideas Summit 2016, which takes place on 21st April, we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.
But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!
According to a survey by KPMG, on average 40 per cent of organisational spend happens without any input from procurement. At a time where procurement needs to be delivering value to the business, tackling maverick spend in the organisation is a good place to start.
Stuart’s Big Idea is exactly that. He believes that for procurement to be valued for its strategic role, it needs to demonstrate its impact on the whole organisation.
Stuart goes on to say that this can only happen through giving access to user-friendly solutions, and demonstrate the benefits of doing this across the organisation.
How to Submit Your Big Idea
We don’t mind if you film your submission on your phone, tablet, laptop or PC. However, to help you out we’ve compiled a list of some of our recommended methods for reaching out.
The opportunity for predictive analytics and Big Data in procurement goes well beyond spend.
Hackett’s 2016 Procurement Key Issues Study shows that increasing agility is a critical development area for organisations. It also shows that predictive analytics and forecasting tools are identified as having the greatest transformational impact on procurement in the future.
A confluence of high volatility, technology-led innovation, and hyper-competitive market conditions, has accelerated the rate of change in business to unprecedented levels. Agility is the key to success in this environment. In a procurement context this has four attributes:
Proactive Decision Making: Leveraging information and predictive analytics to improve the quality and timeliness of decision-making.
Value Chain: Industry leadership in digitising their value chain, including supply and demand chains, as well as internal operations.
Planning: Customer-centric planning processes and day-to-day business decisions.
Operational responsiveness: Permitting swift response to changes in the supply chain, customer preferences, the competitive landscape, and business strategy.
However, accessing this data, information and market intelligence is a significant obstacle that must be overcome.
Becoming information-driven should be a primary focus area for procurement. The function must develop the tools and skills that will allow staff to apply market data and intelligence to decisions on spending and sourcing strategies. Creating deep, consultative working relationships with business leaders, demands that procurement bring this valuable expertise to the table.
This level of insight requires high-quality, real-time market intelligence. However, over half of the Key Issues Study respondents lack a formal market intelligence program or are in the very earliest stages of adoption. At the same time, establishing data governance and building a continuous improvement culture for data management and quality, are also tactics increasingly adopted by organisations.
Access to market intelligence, and ensuring that sourcing and supplier relationship management teams are using high-quality category and supplier intelligence, are prerequisites for agility.
Transformative Impact of Predictive Analytics
As procurement’s role matures from transactional facilitator to trusted business advisor, proficiency with the next generation of analytics – a.k.a. “big data” – will be a key enabler. Big data has been a game changer when it comes to customer analytics, offering an unprecedented ability to quickly model massive volumes of structured and unstructured data from multiple sources.
Good examples from the digital world include Google’s insight into customer behaviours and preferences, and Amazon’s ability to anticipate orders and ensure on hand stock to meet demand.
Predictive analytics refers to the use of statistical and mathematical techniques to predict the probability of future events occurring.
The predictive analytics and forecasting use case for procurement can be an increased focus on business outcomes, through greatly enhanced forward looking decision support capability; and automated and real-time information and analysis availability. Both of these are underpinned by greatly improved data quality.
Combining predictive analytics with cognitive tools will allow, for example, upgraded end-user buying experiences and automated sourcing actions to anticipate supplier and market events. It will also allow for forecasting of and acting to mitigate the impact of supply chain disruptions, and reduction of the severity of supplier risk events.
How do we respond?
As procurement leaders this situation poses challenging questions:
What are the business outcomes and specific use cases for predictive analytics?
How can we accelerate the organisation towards a single view of data and segmentation?
Do we need to access new sources of meta and domain data?
What is the value from faster, more frequent and higher quality information and insight?
Taking advantage of advanced analytical tools and methods requires appropriate staff with the skills to use them, as well as new technology roles, aligning business agendas, and elevating the overall level of technology knowledge. Future talent management plans should reflect the importance of training and hiring staff to handle the sophisticated analytical tools and methods, to deliver the full potential of Big Data.
Analytical projects are not without challenges. Procurement leaders who have not already started down this path should use the high-stakes competitive environment of 2016 as a burning platform.
About Hackett’s Procurement Key Issues Study
The results of this annual study are gathered from executives from over 180 large and global companies operating in the US, Europe and rest of the world, with annual revenue of $1 billion or greater. Find out more at the Hackett Group website.
Chris Sawchuk will discuss why procurement needs to be more agile during his keynote address at the Big Ideas Summit on April 21st.