Science Behind Savings
Procurement requires broad set of commercial skills combined with knowledge around product category, market, and strategic sourcing. This does not mean however, that the profession relies solely on experiential knowledge and commercial savvy.
Procurement and Supply Chain activities are fact-based exercises that capture the best value for money by looking at:
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Historic spending
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Total Cost of Ownership (TOC) modelling
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Price benchmarking
Technology plays a vital role
From a strategic perspective, spend management leverages:
Big data analytics
AI
Machine learning algorithms
Cloud computing
to find trends and anomalies in vast amounts of historic data.
This objective business intelligence is then layered with subjective insights by organisational stakeholders and subject matter experts. This allows strategic plans to be put together to drive savings projects, as well as transformations in policy, process and structure.
Starting from simple reporting and visualisation, organisations can take increasingly sophisticated approaches to spend analysis by organising, segmenting, and reorganising the data. The way in which any given enterprise will do this is specific to their industry sector, market, and established practices and behaviours. Data Analysts are thus increasingly sought after in organisations with complex supply chains and large amounts of spend.
Risks in building an internal analytics unit
By building highly specific data analysis models, an organisation may insulate itself from cross-sector insights and benefits.
There is an IP risk of concentrating specialised knowledge in a few pockets across the organisation. And finally, the resource requirement of personnel, processing, and hosting platforms may exclude some organisations from the competitive benefits of big data analytics.
Comprara’s dedicated business analytics unit
Comprara help a variety of organisations solve wide and varied problems in handling the data generated from commercial activities and feeding it back with actionable insights for spend management.
Treasury Departments for example, require spend reporting across all facets of government to ensure efficient and transparent use of public expenditure.
Healthcare providers operating a vast network of hospitals, clinics, pathology and radiology centres need a single source of truth to manage catalogues of similar items bought across hundreds of sites. Their recent engagement with an NDIS provider looked specifically at Fleet Management, where historic data revealed not only how to best manage the fleet - but predicted driver behaviours that would cost the provider most.
Resourcefulness runs through every vein of the procurement profession, and data (if that is your specialty) is a key tool in this arsenal.