Kronos Group

How to optimise your supply chain with procurement analytics


Procurement analytics is a comprehensive process that involves data gathering, analysis, and insight extraction to strengthen the procurement process in terms of cost reduction, efficiency improvement, and profitability enhancement. It can also play a pivotal role in supply chain optimisation as a result.

To understand how procurement analytics improves supply chain operations, it is important to understand what it provides for the overall procurement process. With a wealth of data and insights, it can be used to significantly improve procurement performance by streamlining operations.

If you are wondering how to implement procurement process analytics in supply chain operations, it involves data collection, processing, and reporting and analysis. This process is no easy feat to achieve, but the end result has the potential to pay dividends for years to come.

Procurement analytics is a highly effective form of data-driven decision-making practices in the procurement function. As such, it is also a valuable tool to optimise the supply chain.

Analytics in procurement involves extensive processes where procurement data is gathered and analysed to extract insights that can inform the decision-making process to drive value.

The data that is collected can be both internal and external, with internal data including transactional data and supplier-provided information like invoices and purchase orders. External data may include supplier information, currency rates, and third-party proprietary data like risk profiles and indexes.

The decisions that are taken as a result of this process also contribute to a streamlined supply chain. The supply chain is an extremely important part of the overall procurement function and maintaining a smooth supply chain bereft of disruptions and inefficiencies is vital not only for smooth operations but also for a strong bottom line.

Here is how procurement process analytics can be used to optimise supply chain operations—reducing costs, improving efficiency, and driving growth.

How procurement analytics improves supply chain operations

By its very nature, analytics associated with the procurement process provide full visibility into its processes, from sourcing to payments. This is facilitated as a result of the in-depth data collection procedures that are carried out as part of the analysis process.

This helps procurement teams and the management identify the inefficiencies and bottlenecks present in the supply chain that have the potential to disrupt its smooth operation. On the contrary, it is also useful for identifying opportunities that can enhance its performance, like cost-saving options and supplier consolidation opportunities.

Since the analysis process also takes an extensive amount of past and present data into account, organisations can identify patterns and trends that can inform future forecasting and budget management activities.

Taking both internal and external data into account also results in a much more robust risk management function, allowing organisations to ensure that unexpected events do not disrupt the usual order of operations.

Since procurement process analytics can also be used to monitor supplier performance, it is highly valuable when identifying options for supplier consolidation and collaboration and optimising supplier contracts. It also helps identify trends that impact the supply chain.

Overall, proper analysis of the procurement process facilitates optimised operations and an improved bottom line.

How to implement procurement process analytics in supply chain operations

Implementing a proper analysis process in the procurement process is no simple task, but it is worth it for the dividends it will pay in the long term.

Here are the 3 steps organisations can take to implement procurement analytics in supply chain operations.

  1. Data collection

The first step in the analysis process involves uncovering all possible forms of data related to the procurement process and extracting it. The data must also be consolidated in one place for easy accessibility.

This helps organisations eliminate outdated methods of information storage and store them in a central, singular database which significantly improves accessibility.

Automating the process of data collection is recommended as it can be a complex and time-consuming task if done manually. Automation improves productivity and simplifies upcoming processes.

Data security can also be improved upon with the use of digital systems as opposed to manual forms of data storage.

  1. Data processing

This stage involves cleaning the data and classifying it into clearly defined categories so that clarity and accessibility can be achieved. 

These accurate data classifications lay the cornerstone for an effective procurement analytics process.

The data processing function is vital as it allows organisations to understand their spending practices in all aspects of their procurement operations. 

Consolidating heterogeneous data sets in a single database with a clearly defined classification system makes these spending practices easy to optimise and manage across the organisation.

  1. Reporting and analysis

Once the data processing process is done, the analysis can be conducted to reduce costs, increase efficiency, and improve profit margins.

Processes that can be augmented by analysing the procurement function in this way include strategic sourcing, category management, sustainability, risk management, and supplier performance evaluation.

Optimise your supply chain for long-term success and growth with effective analysis of procurement processes

Conducting a thorough analysis of your procurement process can provide ample opportunities for supply chain optimisation. 
Implement procurement consulting in your organisation for a more robust and streamlined supply chain.

Julie Brand

A part of Kronos Group’s team since 2018, Julie is a leader who has honed her specialisation in business transformation and utilised her expansive financial expertise to power business strategy and add value to what we do. She has amassed experience (Pfizer, Sony, AXA, SMEC, Tradelink) all over the world in strategy, project management, analysis, and supply chain.