Tag: spend data management

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SpendEdge Webinar on 7th and 8th Feb – Is advanced analytics shaping the way procurement teams will look at data?

The procurement department is considered to be the backbone of any business – and even though for many years, the procurementyatheesh department functioned more or less the same way, the new wave of digital technology has led to a radical shift in that thinking. The rapid development of digital technologies has changed the business world altogether and is expected to grow at an unprecedented rate. So it is entirely possible that the procurement teams will be dealing with new sets of digital opportunities. The rapid evolution of data analytics capabilities has enabled companies to store and process a large volume of data to generate relevant business insights in real-time. Such insights provide valuable information to the procurement teams, which help them make smart decisions on spending, managing suppliers, and designing better strategies. In an era that is fiercely competitive, the use of data analytics in procurement functions becomes essential to gain a competitive advantage. In a few years, analytics in procurement will not only be a matter of gaining a competitive edge, but also a matter of survival.

What are the opportunities for advanced data analytics in the field of procurement?

sanyaFor a long time, businesses have been reliant on intelligence systems to process historical information and identify the current trends in the business. The capabilities of those systems were limited to the point where they could only help out with basic forecasting. However, data analytics has and will continue to have considerable implications in the field of procurement. Historical data can be used to generate meaningful insights and propel strategic business decisions. Big data and advanced data analytics can also enable automated P2P procurement, predictive strategic sourcing, and establish a proactive supplier relationship management strategy. The rapid evolution of the IoT will only exacerbate the vision of a fully automated future, moving procurement teams away from small, repetitive tasks to tasks that are more strategic in nature.

Conducted by SpendEdge’s procurement experts, this webinar on the 7th & 8th of Feb will cover the following:

  • What are predictive, prescriptive analytics, and advanced data analytics?
  • Explore how predictive analytics helps achieve efficiency in the procurement process lifecycle
  • Key non-procurement areas where advanced analytics could add significant value
  • Insights on successfully setting up a best-in-class advanced analytics strategy

emea audience

NA Audience

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How AI is Driving Innovation in Spend Analysis

Numerous cost-saving opportunities are lying across the company’s supply chain. For many procurement managers, the cost incurred by the organization are often inevitable. Also, they cannot quite figure out which expenses are avoidable and which costs are contributing to the business success. That is the exact reason why procurement and sourcing managers are increasing their dependency on spend analysis to collect, classify, and analyze expenditure data in order to increase procurement efficiency and cost-savings opportunity. Currently, all the major organizations are using spend analysis to improve efficiency, reduce maverick spend, and increase cost-savings. Companies have to look out for innovative tools and practices in spend analysis to increase their competitiveness and improve their cost structure. The rise of artificial intelligence (AI) is helping procurement organizations gain new insights to shape effective strategy with spend analytics approaches.SE_Demo2

Strategic Sourcing

Companies resort to using historical data during their supplier selection process. However, using historical data alone would not be the best option to base a strategic sourcing decision. Using latest machine learning methods, procurement teams can run a spend analysis before, during, and after a sourcing event to evaluate supplier performance. With the use of AI, the organization can view produce demand breakdown, market analysis, cost component analysis, and supplier performance analysis even before a sourcing event begins. Extensive knowledge about supplier and market condition enables procurement teams to analyze spend patterns with selected suppliers.

Supply Management

Selecting the right supplier is just one of the process in the supply chain. The supplier performance has to be constantly monitored and evaluated to ensure that the relationship is adding value to the company. Spend analysis program focuses on analyzing the spends against suppliers in terms of individual suppliers, purchase volume, mode of shipment, and mode of payment. Since all data points are not expressed in absolute terms, with some in the form of semi-structured data, procurement teams need to turn to AI for procurement analytics needs. For instance, instead of manually going through purchase orders and invoices, AI and procurement analytics can help them determine inventory overhead costs and predict stockouts by looking at purchase orders and invoices.

Risk Management

Procurement organizations are continually monitoring their strategies to increase their efficiency. However, not everything goes as per plan. So, the strategic management process needs to incorporate an additional factor, risk. All modern analytical engines can accurately provide insight into past performance and predict future outcomes. However, what sets AI apart from traditional data analytics is its ability to include external factors to predict risks. Leading analytics platform can perform analysis by integrating factors such as market prices, commodity data feeds, and numerous complex data sets including financial risk scores, CSR scores, and third-party data sources related to risk. With such analysis, procurement teams can perform a robust spend analysis to ascertain spending limit with each supplier factoring in risk elements.

For more information on spend analysis, procurement analytics, spend analysis tools, spend visibility, supplier spend analysis, contract management, and category spend analysis:

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Top Three Spend Analysis Best Practices

Organizations must adopt spend analysis best practices as it is key to achieving procurement and sourcing success. Majority of the companies make their decisions based on inaccurate, poor, and incomplete data obtained through unreliable sources. As a result, businesses were unaware of how much they spend on which products, thereby relying on guesswork and intuition. Today, organizations have realized the importance of spend analysis to increase the efficiency of their procuremenSE_Analystt function. Chief procurement officers (CPOs) and other procurement professionals must leverage these spend analysis best practices to ensure an efficient and effective spend management program. By adopting spend analysis best practices prevalent in their respective industry, businesses can gain insights that help organize, plan, and manage procurement and sourcing decisions in the organization’s supply chain. Spend management is gaining momentum in enterprises to drive continuous improvement in supply management, thereby enabling strategic decision making.

#1 Spend Analysis Best Practices –  Audit Spend Management Capabilities

One of the most important spend analysis best practices that organizations must adopt is to conduct an audit of the businesses spend management capabilities and infrastructure. Businesses can begin with understanding and creating a spend data system map, check the completeness, accuracy, and depth of the available data, conduct a company-wide spend analysis, and gain a clear picture of existing data management processes. Organizations must also assess their internal capabilities and skills, enlist the areas that need to be augmented, and finally ensure that data is accessible to everyone involved in the decision making process.

#2 Spend Analysis Best Practices –  Detailed Spend Classification

Organizations must ensure data cleansing and classification with the help of spend analysis software or tools. These spend data management solutions facilitate extraction, classification, and analysis of spend data, thereby automating and streamlining current processes. Furthermore, businesses must ensure a detailed classification of the spend data, thereby enabling visibility and comparison across supplier and commodity attributes. A detailed spend classification provides the organization with deep visibility of the total spend, thus facilitating strategic sourcing decisions based on accurate and actionable insights.

#3 Spend Analysis Best Practices – Leverage Supply Intelligence

One of the spend analysis best practices for organizations is to leverage business and supply intelligence to obtain a clear picture of the company’s total spend and compliance standards. Enterprises can also enhance and enrich their spend data with the insights gained through supply intelligence, thus leveraging the insights to make trade decisions. The external market and supply intelligence offer necessary actionable insights that help businesses to optimize sourcing decisions and inventory strategies.

To know more about spend analysis best practices and supply intelligence

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View the latest case study from SpendEdge to know how a better and a smarter spend analysis solution can benefit your organization to reduce costs and improve process efficiency. 

 

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Why is Spend Visibility Important?

Earlier, procurement was considered an irrelevant purchase function. But big data analytics and spend visibility have contributed immensely in driving procurement all the way from low to high priority. This overdose of information and a clear spend visibility has enabled procurement professionals to make strategic business decisions, thereby improving its procurement process and constantly updating the organizational supply chain.

Organizations often tend to make a mistake by allocating funds without the right data and spend visibility thus sending the company’s budget down the drain. That is when spend analysis came to procurement’s rescue. Spend analysis has helped the organization to gain true spend visibility across geographies and different silos thereby identifying and evaluating expenses throughout the supply chain. Spend analysis is a process where the expenses of an organization are collated, classified and analyzed to reduce the overall procurement costs. If done properly, it can prove to be extremely beneficial to the business and contribute to the organizations topline. Read more about how spend analysis can benefit your business.

Understanding the Importance of Spend Visibility

It is essential for the organizations to have a clear picture of where exactly they are investing their funds i.e. to have a clear spend visibility. But in reality, organizations seldom engage in spend analysis activities in order to have a distinct spend visibility. It is important that the businesses carry out spend analysis in order to enable an efficient spend management. For several organizations, managing their indirect spend categories is an opportunity to create significant savings. However, it is viewed as a challenge that cannot be conquered. In order to facilitate spend visibility, identify and analyze the indirect spend categories, the organization requires to invest in spend analysis solutions, thereby initiating better procurement practices. A good spend visibility tool or methodology will assist in identifying the areas to drive cost saving opportunities, thereby creating an efficient supply chain. The areas where costs can be saved are,

  • Analyzing categories will deliver insights on the organizations total spend. Gaining spend visibility will help them to identify those procurement categories where excess money is being directed. This means that the organization is paying in excess to the value derived from it.
  • Spend analysis of the suppliers can help identify the best deals and prices offered by them which is beneficial to the business. Therefore, the organization can establish long term relations with few but highly efficient suppliers.
  • Planning and maintaining optimum levels of inventory and placing orders in advance help the procurement professionals to enjoy low prices as a result of little or no demand as opposed to a peak period where every supplier will overcharge due to excess demand.

By focusing on these areas, the organizations can facilitate cost reductions which will create a positive impact on the organizations balance sheet. This is indeed a wakeup call for the companies. Spend visibility and analysis is not just restricted to identifying and understanding the expense pattern of the organization but it assists in drawing meaningful insights and categorizing data patterns to devise effective sourcing and procurement strategies.

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