The document discusses the use of procurement analytics. It begins by explaining what procurement analytics is and its applications in areas like vendor evaluation, spend analytics, demand forecasting, and contract management. It then discusses why analytics is important for procurement given the large amount of data being generated. The document also summarizes a study that showed analytical tools can improve forecasting accuracy and decision making over intuitive methods. It concludes by providing recommendations for how organizations can implement procurement analytics by addressing challenges related to skills, processes, systems, data, and culture.
7. Source: Competing on Analytics: The New Science of Winning (Davenport / Harris)
What?
CompetitiveAdvantage
Sophistication of Intelligence
Optimization
Predictive Modeling
Forecasting/extrapolation
Statistical analysis
Alerts
Query/drill down
Ad hoc reports
Standard Reports
“What’s the best that can happen?”
“What will happen next?”
“What if these trends continue?”
“Why is this happening?”
“What actions are needed?”
“What exactly is the problem?”
“How many, how often, where?”
“What happened?”
Predictive
Analytics
Descriptive
Analytics
Analytics Sophistication Levels
WHAT WHY HOW
24. Next Steps
Organisation
Leadership – gain support
BUs – collaborate, share
Skills – develop, hire or share
Culture – fact-based, not just gut-
feel decisions
Process
Embed analytics in processes
WHAT WHY HOW
Systems
Short-term – integrate, consolidate
& fully utilise existing systems
Long-term – invest in an
eprocurement suite and
specialised analytical tools