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Creating real value from big data

Creating value from big data

Big data continues to dominate technology headlines and, although often thought of as a buzzword, it’s a concept that simply can’t be ignored by procurement.

 

Big data is one of the most important computing developments of the age, driving innovation in other technologies, such as artificial intelligence and cognitive computing. Research organisations were, as far back as 2015, encouraging CIOs to turn their attention to it, and, more recently, Deloitte said there is less demand to read about the topic but more desire to actually do something with it.

 

But, for CPOs having big data conversations with their CIOs, a major hurdle exists in turning predictions of supply chain disruption, knowledge of supply markets, and a lack of resources, into something measurable, usable and useful.

 

In other words, how does procurement turn big data in the supply chain into consumable big data in the value chain?

 

There are five distinct procurement performance areas within the big data value chain: spend analytics, category analytics, supplier analytics, compliance analytics and performance analytics.

 

With more organisations moving from procurement to e-procurement, the potential for collection, analysis and use of business, meta and machine-generated data is significant.

 

The message is simple: to enable procurement visibility and to leverage big data for savings and spend, CPOs must collaborate with their CIOs to implement digital procurement solutions. These solutions should transform unstructured data found in the likes of documents, contracts, emails and spreadsheets into meaningful and accurate datasets ready to be taken from the supply chain and applied to the value chain.

 

Your first port of call for big data sources is a procurement software or cloud solution that enables B2B, B2C or B2G purchasing, as well as the sale of goods and services. From there, you can check your access to supply market intelligence including supplier financial statements, data gathered through RFX processes or service level agreements and key performance indicator data captured through supplier reviews. It can include internal data sources such as stakeholder reviews, SRM programmes and, importantly, how your business interacts with suppliers.

 

Gaining this visibility and control of the supplier ecosystem enables big data usability, and, in turn, acts as an enabler for predictive analytics.

 

Full traceability

 

More and more devices are connected to the internet, meaning data is now also produced from these sources. The ability to trace products across the entire supply chain has become a reality and platforms promise to turn big data into answers. These answers can reduce cost and risk, and create opportunities to boost procurement productivity and engagement. By combining them with historical data and customer insight, a CPO can move away from making reactive decisions and instead take a progressive and forward-looking viewpoint.

 

This competitive advantage will allow procurement to understand and explain why, for example, prices are increasing in unusual ways, why a strategic supplier suddenly has quality issues or service level metrics outside its normal range, or why payments to suppliers have slowed down when process changes were supposed to speed them up.

 

The benefits are compelling. No longer will you make decisions based on savings, spend and customer data gathered over the previous fiscal year, often from invalidated or questionable sources, but they can do so in real time, with much higher levels of veracity, and with added insights that drive future probability forecasting.

 

A big-data-powered procurement function with a new set of data skills will be required and will be expected to take a higher profile leadership role within the c-suite, collaborate more closely with finance and supplier teams, develop a partnership approach to big data, and work towards the same business goals.

 

This topic of understanding and leveraging big data towards value creation will be discussed in more detail at the Data Intelligence & TechX Forum in November. Find out more here

 

James Waite is head of technology and product enablement at Gibbs Hybrid

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

James Waite
Posted by James Waite