The 7 Behaviours of Analytical Procurement

Last week, Gerard Chick, Chief Knowledge Officer at Optimum Procurement Group, looked at how procurement professionals can take advantage of analytics and use their findings in their decision-making processes. In the second article he looks at analytics and identifies the seven behaviours you need to adopt to take advantage of analytical procurement.

  1. Be aspirational

Procurement leaders must be aspirational and show others how the use of analytics and data can create business value to help predict future trends. Procurement spends a lot of its time looking backwards – at money spent last year, supplier performance in the past month -- sound use of data can help to develop models that look forward.

  1. Be talent-hungry

The procurement leadership team must be realistic about the collective ability of their existing workforce. Many businesses will look to other industries to attract the right talent, because they understand that emphasising skills over experience when hiring new talent is vital to success.

The modern procurement skillset is changing and today’s procurement professionals need to be increasingly commercially aware. They also need strong quantitative fluency and be competent in developing and deriving solutions from datasets. The people with these skill sets may not work in your industry; hire them anyway.

  1. Be ideas-driven

It’s essential to cultivate newly hired talent and ‘idea-incubators’ should be used as part of your growth plans, working away from the ‘business-as-usual’ crowd. Their brief should be to challenge everything. They will question the norm and establish an operating model that utilises the full power of available data to develop robust, evidence-based procurement choices.

  1. Be courageous

Today’s procurement leaders must aggressively challenge the status quo rather than accept normative behaviours. Look at how everything is done, including the products and services your organisation offers and the market segments you address and ask ‘why do we do that?’

  1. Be quick and data-driven

Organisations need to move to a cycle of continuous delivery and improvement, adopting methods such as agile development and ‘live beta’ supported by big data analytics to increase the pace of innovation.

Integrating spend and other procurement data sources into a single system that is accessible to everyone in the procurement team will enable faster decision making. A single analytics portal, providing up-to-date data across spend, products, suppliers and regions, which emphasises projections over historical data, will help teams to quickly identify issues, and take steps to address the problems.

  1. Be pragmatic

For many organisations, the focus of their investment in technology tends to be on customer-facing solutions. Many do not realise that they can extract just as much value, if not more, from investing in back-office functions that drive operational efficiencies. Contemporary businesses realise that success is more than just finding new revenue streams; it’s also about creating value by reducing the costs of doing business.

  1. Be realistic

The ability to make decisions based on data is particularly important in supply management where the trade-offs are complex. Supply management analytics is therefore not just about crunching data and finding correlations, it requires a deep understanding of the way an organisation’s supply management works and the factors that influence costs and risks. If the trade-offs are balanced well, these types of analytics projects can result in large savings, while maintaining service levels and other important performance measures.

Big data and analytics can have an amazing impact; but they can’t answer every question – and there is a real danger of companies spending vast sums of money, only to end up with a system which cannot be disposed of and the cost of which is out of proportion with its usefulness.

The opportunities derived from greater use of analytics stem from three primary needs: a requirement to drive purchasing and spend efficiencies; a desire to use procurement knowledge to advise the business strategically and a need to innovate and improve the performance of the supply chain. To take advantage of the analytics opportunity procurement people must understand their analytics direction, but they must challenge and disrupt the norm and experiment too.

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