Sourcing and Procurement

A deep dive into the significance of procurement analytics and its impact on business

Although many find shopping a therapeutic experience, shopping – or rather procurement – in a business setting is anything but relaxing. A tangled mess of stress, risks, and hopes that nothing goes wrong, procurement involves choosing suppliers, negotiating terms, managing vendor contracts, ordering, receiving, and inspecting goods, and paying invoices – just to name a few.

Businesses have often relied on manual and time-intensive processes to manage their procurement, leaving little to no room for optimisation. However, with the rapid advancements in big data and advanced analytics solutions, procurement analytics has emerged as a powerful tool to help modern businesses streamline and optimise their procurement processes.

What is procurement analytics, and how does it fit the procurement process?

Procurement analytics is the process of collecting, organising, and analysing procurement data to derive key insights that can guide business strategy via informed decision-making. It leverages large amounts of data to offer a visual overview of the business and procurement activities to support cost savings, enhance supplier relationships, and facilitate better decisions.

Procurement analytics is useful at every stage of the procurement process and can help improve efficiency and effectiveness for:

Planning and sourcing

Guiding the buying process by analysing supplier trends and finding the supplier best suited for the organisational needs

Contract award and management

Ensuring suppliers meet contract obligations and monitoring spending to determine whether to renew or terminate contracts

Supplier performance

Setting performance targets, monitoring progress, and suggesting corrective actions

Spend analysis

Identifying spending patterns and finding ways to optimise the expenditure

Importance of procurement analytics

Providing valuable insights into various aspects of the purchasing processes – quantities, frequency, pricing, supplier terms, and efficiency – procurement data analytics leverages business data to optimise the overall purchasing operations. This can open up many opportunities for modern businesses to optimise processes, cut costs, reduce risk, and build a competitive advantage.

Here are some opportunities modern procurement analytics and procurement strategy services can offer to help you optimise your procurement operations:

Demand forecasting

Essential for successful planning, demand forecasting enables you to predict consumer demand and accurately estimate goods or materials you would need. Leveraging either internal historical data or Machine Learning (ML) techniques to analyse more diverse datasets, you can accurately forecast demand and achieve an optimised inventory, reduced costs, and enhanced vendor negotiations.

Predicting price changes

Procurement data analytics can help you detect and predict price chances in today’s dynamic market – a crucial element for successful procurement. Procurement strategy services often leverage techniques like data aggregation and forecasting, supporting strategic procurement planning, budget creation, and optimised spending.

Contract management

A thorough review of contracts is essential to ensure clarity and compliance, as overlooking key details can translate into tangible losses. ML-powered techniques – like NLP or OCR – can facilitate automatic contract review and audits to identify any ambiguities and ensure compliance for time and cost-efficient contract management.

Compliance and fraud detection 

Invoice and payment analytics solutions in procurement strategy services can help identify and address any compliance, fraud, and dark purchasing issues. Leveraging automation and intelligent document processing solutions can help you streamline accounts payable processes, reduce errors, enhance accuracy, detect fraud, and ensure compliance across the procurement process.

Cost analysis

Procurement analytics can help you evaluate both direct spending (concerning company products) and indirect spending (operational expenses) for a comprehensive cost analysis. This can help you categorise expenses, identify inefficiencies, and discover saving opportunities for cost optimisation.

Performance monitoring

Procurement data analytics takes the complexities of manual KPI and market data monitoring out of the performance monitoring process, leveraging advanced data analytics tools to not only monitor supplier KPIs but also evaluate potential partners. This involves risk assessment, identifying potential disruptions, and building a robust supplier network for effective supply chain management.

Procurement data analytics use cases

Deriving data from internal (supplier-provided data, transactional data, and tactical data) and external (public, internet data, and 3rd party proprietary data) assets, procurement data analytics finds uses across various procurement functions.

How can Infosys BPM help optimise your procurement operations?

Infosys BPM procurement strategy services can help you transform your procurement operations through consultation services, tech implementation, and project-based services. We offer services like procurement transformation, technology assessment, spend analytics, opportunity assessment, and capability assessment to help you drive overall value, manage risks, and sustain competitive advantage. Leverage the power of AI, robotics, and deep procurement analytics with Infosys BPM to transform your procurement operations.