Published on
8 January 2018
Read time
4 mins
Hackett’s 2017 Procurement Key Issues Study showed that enhancing agility is a key development area for organizations. It also showed that forecasting tools and predictive analytics tools are highlighted as having the greatest transformational impact on procurement in the future. We, at 7 Step Solutions, believe this will be an area of focus within 2018.
A convergence of technology-led innovation, high volatility, and competitive market conditions, has sped up the rate of change in business to record levels. Agility is critical to success in this environment. In a procurement perspective this has four features:
- Operational responsiveness: Allowing quick responses to changes in customer preferences, the supply chain, business strategy and the competitive landscape
- Value Chain: Industry leadership in digitizing their value chain, which includes supply and demand chains, as well as internal operations.
- Planning: Customer-focused planning processes and daily business decisions.
- Proactive Decision Making: Making best use of information and predictive analytics to enhance the timeliness and quality of decision making.
Hurdles To Overcome
That said, accessing this data and market information is a significant hurdle that needs to be overcome.
Transforming to become information-driven needs to be a top focus area for procurement. The function must create the tools and skills that will provide teams the ability to apply data and market intelligence to decisions on how the business spends and procurement strategies. Developing deep, consultative business relationships with functional leaders requires that procurement bring this valuable skill to the table.
This level of insight requires high-quality, real-time market intelligence. However, over half of the 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 organizations.
Prerequisites for agility include access to market intelligence, and ensuring that sourcing and supplier relationship management teams are using high-quality supplier and category intelligence.
Transformational Impact Of Analytics
As procurement’s role evolves from transactional facilitator to trusted business advisor, competence with big data will be a key enabler. Big data has been game changing when it comes to customer analytics, and offers an unprecedented ability to quickly model huge volumes of structured and unstructured data from many sources.
Predictive analytics refers to the use of mathematical techniques to predict the probability of future events occurring.
How predictive analytics and forecasting can be applied to procurement can be an increased focus on business outcomes, through greatly enhanced forward looking decision capability; and automated / 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 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.
A Focus For 2018?
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 2018 as a burning platform.
7 Step Solutions is leading a number of Big Data procurement transformations to support optimize organizations procurement agility.
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