The obstacles procurement teams have to overcome are ever-increasing. These procurement process roadblocks can be conquered through the optimization of data and by embracing digital transformation.
The Current State of Category Sourcing
In the current market, procurement teams are competing against continual roadblocks. From supply chain issues and raw material shortages, to inflation and fuel surcharges, the number of factors going into correctly sourcing a category is ever-increasing. Procurement teams must be equipped to respond to a dynamically changing market while obtaining best-in-class pricing in the face of these challenges. Taking a data-driven approach can optimize and transform your procurement process; and provide valuable insights, vendor consolidation and value far beyond savings.
The rise in procurement software usage has increased visibility to internal and external data, which can help a procurement team combat these issues and provide a roadmap to digital transformation. The 2020 Procurement Market topped $5.5 billion in overall market size. Experts believe this could rise to as much as $9.5 billion by 2028, as more and more companies convert and/or consolidate their systems (Research, 2021). However, not every company has an ERP or spend management system to provide comprehensive purchasing data. And for those that do, access to data alone does not guarantee valuable insights. Below we will discuss a few ways that data can be analyzed to drive new value, and how companies can partner with a data expert, like CoVest, to augment their analysis.
Data Visibility Within Consolidation Efforts
One of the recurring nuisances of the procurement sourcing process is lack of data visibility. To address this, a valuable data exercise procurement can perform is to categorize spend into identifiable, sourceable categories. However, the process to categorize company spend data is not without its challenges. Many companies lack a central ERP system and must track down individual suppliers and have them run usage reports to gather data. Other companies have multiple ERP systems, and it can be cumbersome to consolidate reports from all the systems. In spite of centralized ERP systems, many companies are still faced with the dreaded “data dump,” and left with mountains of data to sift through. There are over six million vendors already connected on SAP Ariba (Ariba, 2022), the leader in B2B procurement management, and it is not unusual for individual companies to have many thousands of vendors represented in their spend data. This can leave teams drowning in data, piecing together multiple reports, or chasing suppliers for information. These issues can be overcome by simplifying the process.The three R’s: reduce, reuse, and recycle, are simple, yet long-lasting when it comes to modifying your existing waste output. Large corporations often focus on strategic sustainable goals to put into practice, but low-cost changes can have a significant impact on a company’s resource consumption and provide long-term savings…
Access our whitepaper on transforming procurement problems by using data and gain insight into:
- The Current State of Category Sourcing
- Data Visibility Within Consolidation Efforts
- CoVest’s Machine Learning Spend Categorization Engine
- Cyclicality in Member Purchasing
- And More!
Whitepaper Download: Using Data to Optimize Your Procurement Process