Analysis: Accenture’s Vision of Supply Analytics Will Be Difficult to Realize


No one can argue with the notion that the merger of spend and supplier data – not to mention other data sets – into a common environment for reporting and even predictive analytics will be game changing for procurement. In fact, this is the vision behind Accenture’s argument around the future of supply analytics in its paper Procurement’s Next Frontier – The Future Will Give Rise to an Organization of One.

But I believe that what Accenture is arguing for will actually be quite difficult to achieve. Consider a few of the following reasons:

  • Most spend analysis tools today face inward 99% of the time. And, no, using BLS indexes as opposed to more granular indexes for commodities – which are not mapped to actual cost breakdowns on the line level and contract escalation/de-escalation clauses – does not count as externally oriented view of spend and supply data.
  • Many data providers to the procurement world are dinosaurs. Dun & Bradstreet has done virtually nothing to evolve its supply management products in recent years. Within strong data providers willing to invest in the sector with creative and next generation solutions that integrate different information sets – Ecovadis comes to mind here as a potential spoiler at least around corporate social responsibility (CSR) and related data – it will be much harder for procurement organizations to incorporate new data sets into their decisions, which is much of the premise.
  • Even at the most basic level, supply analytics is exceptionally complicated and spans dozens of different and nearly always siloed data sets and initiatives including:
    • Supply performance analysis (supply chain, category, supplier, etc.)
    • Price/cost modeling
    • Forecasting and hedging
    • Demand planning, sales and operations planning (S&OP), supply planning, capacitated and priced supply plans tied to pro forma business plans, etc.
    • Supply risk analytics (e.g., costed probability/impact of risk types)
    • Contract portfolio analysis
    • Innovation/NPDI analytics (make/buy, innovation maps, DFx, target costing, etc.)
    • Strategic sourcing analysis of spend, markets, suppliers, bids, etc.
    • Compliance analysis (contract, supplier performance, process, regulatory, etc.)
    • Supply base segmentation analysis for sourcing, services procurement management (SPM), supplier risk management (SRM), risk, diversity, etc.
    • Supplier capability analysis for sourcing, SPM/SRM, risk, Lean Six Sigma, etc.
    • Sustainability / ‘green’ analytics (e.g., carbon footprinting)
    • Working capital analyses of DIO, DPO, number of payment terms, payment timing, etc.
    • Inventory optimization (positioning, process, parameters, VMI, etc.)
    • Various supply network analyses to improve transportation, warehousing, contract manufacturing, etc.
    • Analysis of internal PSCM process performance and capabilities

And that doesn’t even cover all of the areas. In short, supply analytics, as Accenture argues for it, is an outstanding vision. But accomplishing this data and insight nirvana will be anything but easy.

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