Data Analytics – Start of the Technology Race for Procurement

We are pleased to bring you this post from Paul Johnson, Director of Procurement Strategy, Governance & Operations at Britvic GB, a leading supplier of soft drinks in the UK with an impressive portfolio of globally known brands. 

I have written this article to share our experience of implementing a data analytics solution at Britvic Soft Drinks in 2015. However it would be a missed opportunity not to present this in the context of the future of Procurement and the impact of technology as we seek to evolve away from a purely process driven function to become more strategically relevant to the organisation.

Data Analytics is a great start on this journey as it gives you a historical baseline and is the first step in building the practices and developing the skills required for the next generation of Procurement professionals who will be more aligned to business intelligence and big data, using predictive technology and analysis of structured and unstructured data to inform supply chain and procurement decisions almost in real time. The more traditional tender process experts will still have a role but will reduce in prominence as automation increases.

So data analytics is exciting and an important start in creating visibility, acting with pace and making informed business decisions; here are four areas of consideration to avoid potential pitfalls in your search for a provider:

Solid Business Case and End-to-End Technology Strategy

Create excitement through a robust business case focusing on visibility, spend under management and financial control. Also look at what other technology costs you have in Procurement that aren’t adding value and free up those funds to cover your initial outlay. Thoroughly explore the market place as it’s quite large, with a plethora of providers along the spectrum of point solutions (specialising purely in analytics) to end-to-end providers who can cover the full source-to-pay value chain.

Make sure you have considered your end-to-end procurement technology strategy. Even if you select a point solution you want to be confident that you are not going to be faced with any unmanageable integration challenges with additional technology providers further down the line. You may not be in a position to go to the market for your entire requirements at once but you can make decisions that keep your options open.

Understanding Internal IT and Future Business Requirements

Make sure you build a strong project team with your ERP expert and IT project manager at the core of it. IT is typically under siege from all other functions wanting to push the boundaries on their technology aspirations so having a strong business case to secure your IT team is paramount.

Consider your data extraction carefully with your IT colleagues and your service provider. In complex ERP systems you have to be clear on the fields you want to extract and automate the extraction process to minimise workload at your refresh points – be that monthly or quarterly. This may take significantly longer than you expect and requires a strong project team from the outset especially if you have multiple data sources.

Think ahead about the business processes you want in place to maintain/improve the data quality and content. This is a must if you want to make data analytics sustainable and not a one-off exercise. It’s also going to minimise any potential additional costs further down the line. For example, automate the data extraction processes and design it with the flexibility to delete or add fields. It’s tempting not to do this in order to save time on the initial implementation but it will pay dividends in the long run - what you think you need now might be very different in the future.

Data and Validation

Invest time in constructing a categorisation structure that is going to add value to your organisation. If it only makes sense to procurement it will not help your business engagement, so make it relevant to the industry and business that you are in rather than defaulting to off the shelf standards otherwise you will not get the insight you really crave.

Be prepared to invest in additional data validation with your teams and business partners. Service providers apply their line item analysis to spend categorisation and employ artificial intelligence to create a rule-based system to recognise future instances of spend. This is great and it gets you a long way to a clean data set but not all the way. Before you start parading your new tool to business partners, put the extra miles in with the category teams to validate the data. This may sound like duplication of effort but believe me, it’s not – we spent over 200 hours of secondary cleansing with the category teams before we released to the wider business.

Beyond Procurement

Be prepared for the challenge of taking the tool beyond procurement and into finance. Cost centres, project codes, cost allocation, payment terms, cash flow and working capital, budgeting support, tax allocation are just some of the areas we identified as value adding to the organisation which means a second wave of effort to get the wider business utilising the tool. Remember that we started the article about strategic relevance and moving to a more analytical and data intelligence based skill set, so don’t leave the business education to chance – take a lead on it and demonstrate the expertise to the other functions and make yourself indispensable.

In summary, embrace technology as it’s changing our function for the better and keep in mind the skill set of the future may well be very different from traditional procurement skills of today, so make sure your capabilities and technology strategy are aligned.

I hope this has given a useful insight into our experience of data analytics and good luck in your respective journeys!

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Voices (2)

  1. Dan:

    “Create excitement through a robust business case focusing on visibility, spend under management and financial control.”

    Do you get out much?

    1. Paul:

      Very good Dan….not enough it seems….PS Thanks for being the first reader

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