5 steps for 2020 procurement dashboard vision
Why build procurement dashboards?
If you spend a lot of your time analysing detailed data feeds and generating summary reports. Trying to make sense of the information you get from different sources such as excel spreadsheets, ERP systems, accounting software, databases and manual forms. Then you could benefit from building procurement dashboards.
A dashboard should contain a snapshot and summary of key information in a visual form. Enabling you to get an instant impression of how you are performing across your scope of management. Your dream dashboard will enable you to assess KPIs that you can directly impact and enable you to make decisions based on factual data.
With the huge amount of business information available and data visualisation tools to use, dashboards have become essential tools for Procurement.
But just how easy is it to build a dashboard and what do you need to consider?
Step 1: Identify your key information
Identifying the key information requirements for your procurement dashboards is critical
Start by considering what your procurement dashboards need to contain. Imagine what information you could have in an ideal world, then prioritise what the most important information is to you.
Here are a few ideas for your list:
- Cost savings/changes over time
- Supplier cost savings/changes
- Project Spend
- Category Spend
- Bespoke Spend
- Summary of KPIs – total spend, total orders, average order value
- Chart showing no of orders to date for a given time period
- Line chart showing supplier orders for a given time period
- Timelines mapping supplier order volume against spend for a given time period
- Buyer pie chart showing spend by buyer
- Supplier pie chart showing spend by supplier
- Product pie chart showing spend by product
Using charts is the best way to visually capture and summarise this complex data in a way that can be quickly understood.
Step 2: Choose your reporting tools
Next, you need to consider which tools you will use to produce your procurement dashboards. First, you need to look at where your transactional data is currently held.
The ideal way to produce your dashboard would be to use the data directly from the place where your orders are processed. Such as your transactional platform, order processing system or spend management platform. If you have a spend management platform that either already allows you to produce dashboards or provides access to the data, then this would be ideal.
The advantages of tying the reporting to a transaction system, that captures accurate and up to date data, is that it allows you to create dynamic dashboards. Using information that is up to date, accurate and obtained directly from a trustworthy source. Plus, the reporting is linked to the source data, so it is easier to drill down into the data to identify issues.
If the Dashboard/Analytic tools are not part of the transaction system, then it is important to make sure that there is a strong integration: that is that the analytics system can access the data warehouse of the transactional system in full. Allowing for both Dashboard reports and the ability to dig into the data.
Note: The traditional way to produce reports is using tools like Excel or databases like Access. The advantage is that it is usually easy to put together an initial report. However, this approach can be quite manual in nature, so it can be difficult to ensure the data is accurate. Then, of course, it will be difficult to maintain. Proving limiting and inflexible in the longer term.
Step 3: Ensure accuracy of transactional data
The next step is to ensure you obtain the most reliable data.
While many organisations know that accurate data is key to decision making. They also know that transforming it into a useful asset is not easy. The data is within the organisation; however, it’s fragmented across multiple systems and organisational departments. In fact, it’s everywhere, and it’s often duplicated and combined with other data for specific purposes. Plus, when it is needed it is not readily available. With errors in the data making it unusable or requiring costly manual intervention to correct these errors.
Where transactional data is required, the list of transactions should be as complete and accurate as possible. Transactions are a record of activity and can cover a wide range of actions within a process flow. So, it is important to know what is being recorded during this process and what is important to record and over what time period.
To produce dashboards, data from different sources has to be collated. You will need to ensure all these sources are validated and that the data is trusted to be accurate. For this reason, It is recommended that you avoid manual transfer and recording of data as much as possible.
Storage and data update:
Another area to consider is where the data is stored. A Central Data repository is always recommended, where there is only one true source for the data. Departments storing their own copies of data can cause issues with data accuracy and ageing of data. Tools and procurement automation systems that can access data from other sources help in this context: if copying of data is required for any system this is where disparity and inaccuracy in data can occur.
Transactional data by nature is more volatile, as it is created and changes more frequently. Therefore, an automatic process is important for capturing this data to ensure it is up to date and relevant for decision making.
Any manual updates can cause issues. Data is often shared and used by different business units. For example, information on a supplier transaction will be needed by the person requesting the goods and by the accounts department. Problems arise when one business unit manually updates their records but does not inform the other business unit. For example, the user receives the goods and does not inform the accounts department that this has occurred. In this simple example, the resulting invoice for the goods would then not be immediately processed.
Step 4: Create visual Impact and agree level of detail
It is not just about providing pretty pictures. The purpose is to provide critical management information that can be easily absorbed and can be acted upon.
For example, if a tabular representation of data provides the key information and presents this information in an optimum way then use a table. Perhaps a list of the top ten items, with columns showing relevant data points, is a better way of presenting information than a chart.
The key is to ensure you have flexibility in how you present your data. Proforma dashboards look great, however, they may not help you to make decisions. Being able to create what you need to manage your business domain is the key.
Some points around visual impact:
- Choose what you display for maximum communication and impact to specific users/target groups
- Do not clutter with additional irrelevant or less important information. Remember it is “key” performance indicators, so quality is better than quantity.
- Allow for drill down to more detailed information to support the figures. Financial and audit teams may need to validate and check source data
- Use colours and graphics appropriately for impact and highlighting. Do not distract from the purpose of displaying the information for management decisions.
- If presenting a dashboard, remember that typically you have little time to get across your point. Ensure the dashboard supports your message with only key facts and information.
- Typically, a single screen suffices for a dashboard.
- Remember that dashboards can also be used to display feedback to/from suppliers and also to/from users within your organisation
- Ensure you validate and check the dashboards you create. Inaccurate data not only damages the perception of one specific dashboard, but it also creates an atmosphere of mistrust on all data and dashboards.
Selection of time period is a key requirement for dashboards. Typically, this would be supported once the dashboard is displayed. Adapting the time window to explore change over time or cost savings over time for example.
Try to build flexibility into the dashboard at the outset as report requirements may vary among individuals in the business and will change over time. The more dynamic and up to date your dashboard is, the more useful a business tool it will become.
Step 5: Define access levels and sharing
Finally, consider who the procurement dashboards are for and how the report will be shared in the organisation. Senior members of staff may require top-level financial summary information whilst other employees in the business may need to drill down to a more detailed level, in order to troubleshoot problems with the transactional data.
Dashboards are a great way for procurement to profile what is being achieved across the business. Providing access to non-procurement users of key dashboard information is important. Spend and savings by each department for example.
If your dashboard is going to be a more dynamic and flexible tool, then you could consider setting up different dashboards with different access levels for particular users.
To maximise security, look for a system that can establish different access levels for different employees within the organisation.
For some users, it is important to provide access to an interactive dashboard, with drill-downs to more detailed information. Allowing these users to measure and manage their activity at a more detailed level.
If your dashboard is to be a static report produced on a monthly basis then you may need to create different versions for users within the business that require different levels of information.