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Anyone in the procurement industry who thinks we're already living in some kind of golden age of data-based decision making is quite frankly deluded.
New research recently carried out by Rosslyn revealed that well over two thirds of day-to-day business decisions in the retail sector, for example, are still based on personal experience and human judgement instead of data-based facts.
And the fact that this is happening in industries where insight into supply and procurement data can play such a major role in reducing costs and mitigating risk is pretty incredible.
So why is this the case?
The problem is that there is still a fundamental disconnect between IT departments and business decision makers in how to draw value from data. Anywhere you go as a data consultant, you will still find IT still holds the key to most data treasure troves. Decision makers don't have easy access to it, and often rely on the IT department to provide the insight they need to make strategic decisions; an unnecessarily elongated process.
It's a classic case of cart before the horse, which unsurprisingly means data projects are not showing the expected return on investment. In fact, the research – conducted by OnePoll – found that 71% of corporate leaders recognise the commercial importance of data, but only 11% feel they have actually generated any financial value from it at all.
To overturn this situation, there is now an urgent need for business leaders and IT leaders to work together more effectively. Specifically, they need to collaborate to develop data strategies that define their technology purchases – not the other way around.
You only need to take a look at how the world's most successful companies handle procurement and supply to see the value of this approach in practice. Take Apple, whose success is as attributable to its ability to fulfil incredible demand as it is to making products that people want to buy.
Apple's secret is that it takes a business-led approach to managing an extremely complex web of suppliers. Led by CEO Tim Cook, who has the background and ability to run a supply chain, Apple has become exceptionally adept at understanding not just the direct suppliers it buys from, but also those who indirectly contribute components or services across the extended supply chain, even in the remotest parts of the world. This not only increases efficiency, but reduces the risk that the company will be caught up in allegations of exploiting workers through association to suppliers, for example.
Of course, choosing the right technology is still hugely important, especially now that data analytics technologies are improving all the time. Cloud, in particular, is offering up new ways to achieve complete supply chain visibility more quickly and effectively than ever before. In a matter of hours, you can put data in the hands of those that understand the challenges around procurement so they can analyse spending, supplier performance, and even the best time to pay suppliers, all on a single platform.
With procurement playing an ever more important role in the competiveness of a business, ignoring valuable data already within the organisation is ludicrous.
Charlie Clark is founder and CEO, Rosslyn Analytics.
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.