Does data give your day a va-va-va voom?

Is data the most disruptive force for procurement, or if used correctly, can it power us forward? In 2016, EY released a paper exploring the role of analytics in procurement. The paper is well worth the read, and this got me thinking about two of the ways analytics would change procurement. Namely, a) the talent that we need to start recruiting (or building) today to ensure we don’t fall behind tomorrow, and b) decision making.

The quote, “In God we trust; all others must bring data”, is often attributed to the statistician W. Edwards Deming, although the attribution is often disputed. Regardless of who said it, the quote rings truer today than it ever has. Good decisions require good information and analytics can be the source of this information.

Most businesses already analyse past data to gain insights but increasingly, data analytics will take the form of predictive analytics. More importantly, the volume of data processed to gain insights from the past and to predict the future – this will change. We are talking data reaching the magnitude of petabyte (1 million gigabytes) with multiple facets. But all of this data, properly analysed, would be invaluable in the economy of tomorrow, as is quickly becoming today.

Data will enable suppliers to manage their customers better and data will enable procurement to manage suppliers better.

Detailed analytics will allow the procurement team to track best and worst performers and adjust the supply chain accordingly quickly. The fast response to worse performers is extremely crucial because, with the rise of social media, the chances of bad customer experiences going viral and causing extensive damage of goodwill and consumer trust is simply too great.

Insights from the value chain will help decision-making.

Ultimately, the big winners will be the procurement leaders themselves as good analytics will enable them to be even better at their job. Data and analytics will empower procurement leaders to make better decisions, write better plans and execute better strategies. However, just as it is important to have good data that is analysed using proven and reliable techniques, the best data analytics would be wasted at the hands of a procurement professional who didn’t know what to do with it.

It goes without saying that the new generation of procurement professionals, but especially procurement leaders, will need new skills and chief among them are data skills … yet data science is one of the biggest skill gaps in procurement currently.

Out-of-control data growth can obscure the business insights we need so, the science we need tomorrow should be recruited today. Procurement teams need to start making recruitment decisions today for tomorrow, for example, what are you doing today to simplify data complexity? How are you managing the proliferation of your data sources? The best procurement leaders cannot simply be functional cogs in the organisational machines. We must be thought leaders, generating ideas and driving business strategies based on the vast amount of information at our disposal.

Given the changing roles, it is likely that procurement, which already employs people from a variety of backgrounds, must fill their teams with an even more diverse range of talents. But along with the statisticians, physicist, social scientists, should procurement also hire philosophers? People with humanities background may seem like an odd fit for procurement today but may not be tomorrow because of the requirement to generate ideas. But suffice to say, the make-up of procurement teams in 2025 will be very different from those today.

At the end of the day, embracing data analytics will only lead to good things for procurement teams and procurement professionals. Because data is empowering, it gives you solid evidence on which to base your decisions, plans and strategies. However, data analytics is a tool, and like all tools, people have to learn to use them properly.

Data is plentiful, but insights are rare.

Of course, being a whiz at analytics doesn’t help if you are analysing only one portion of the enterprise picture. This has the risk of resulting in loose correlations, unlinked claims to causality and false insights. Data and Insights go together like the night and moonlight. Prolific big massive data will have you very busy with collection, categorisation, cleansing, cataloguing, migrating and so forth. But without understanding what it all means; your illumination is limited – and you could end up “strategically” jumping at shadows!

Data and Insights are explored as skills and competencies within the Global Procurement Capability benchmark. To participate in the global benchmarking exercise REGISTER TODAY and you will be notified of its launch in April 2018. In the meantime, check out PI Data Analytics delivers Big Data, Machine Learning and Decision Automation Systems to data-reliant industries and functions such as procurement. Call us today to find out we can help you gain intelligence from your data.

“It’s not the tools you have faith in – tools are just tools – they work, or they don’t work. It’s the people you have faith in or not.”  Steve Jobs, Apple