Procurement Data

Published September 2016

Procurement Data

With technological advancements, storing and generating data from suppliers and customers has never been easier. For the procurement department, which works with many different suppliers, a large range of data will be produced. Capturing and analysing this data properly is crucial if procurement departments want to monitor their effectiveness and improve efficiency.

Good Partnerships = Good Procurement Data

Companies must initially ensure that they partner with their suppliers to guarantee high consistency, efficiency, and standardisation of data.

Supplier Finance Control

Efficient data systems could lead to greater visibility and control for its users, as the KPMJ procurement report states. Ready reported data could potentially mean that users would have budgeting and finance control over the suppliers’ and organizations’ spending. This ensure lower costs and improved efficiency.

Contract Compliance Control

Data tracking and reporting systems should allow business users to ensure that suppliers are complying with the terms set in the contracts. Contract terms are usually agreed upon prior to starting the supply process but suppliers might not be adhering to the terms set, and customers may not notice this due to the presence of many suppliers in their supply chain. A reporting and data tracking system will allow users to notice any changes in the costs that are different than those agreed upon.

Tail Spend Management

Tail Spend usually constitutes the 20% ignored and not actively managed spend categories. These are usually composed of the low value, low volume and non-critical commodity products. These products could be anything like uniform, apparels, office furniture, or papers. An effective tracking system will allow organizations to tackle and control tail spend. This will allow organizations to ensure that tail spending is managed efficiently.

Improve Efficiency

An efficient reporting and data tracking system could decrease costs and enhance efficiency. Paul Cook states in his article “Diving Deeper into Data” that data reporting systems will allow companies to identify any processes that are costly, and identify possible ways to eliminate those costs. Organizations could also track where spending is going, and if it is going within the budget limit. In the long term, this efficiency would enhance competitiveness.

Forecasting Costs and Profits

Forecasting prices and costs could be made potentially easier with a reporting system as Jonathan Webb states in his article “It’s Time To Start Planning For 2017.” Firms could potentially forecast costs by observing any patterns for cyclical cycles in costs or sales revenues. Firms can also forecast sales and profits from simply observing the trends of costs or sales.

However, data tracking and reporting must be used in tandem with human judgement and management experience as Charles Clark states in his article “Procurement and IT Must Collaborate or They Will Waste Data Value”. Furthermore, attention must be paid to ensure that the data collected is of high accuracy, focus and quality to ensure optimisation. Finally, users of these software must be trained to deal with the system.

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