Cultivating “big data” and “advanced analytics” to widen procurement window of opportunity throughout the supply chain

Much is being said right noBig data w on the subject of “big data” and advanced analytics although the majority of supply chain managers are not quite sure what either of these terms means that is why Patrick Connaughton and Chris Sawchuk of the Hackett Group have created and issued a new research note entitled “What Chief Procurement Officers Need to Know about Big Data to Become a Valued Business Partner.”

Within the new research notes, four primary opportunities in terms of procurement have been identified in relation to “big data.”

Achieving proactivity by forecasting demand against identified patterns

In the first place big data enables procurement to achieve a proactive status rather than being reactive as they often traditionally are. This proactivity is obtained through the forecasting of demand based on existing identified patterns, thus widening procurement’s traditional window.

Secondly, big data can give procurement a more detailed understanding of any supplier’s performance. This is achieved through comprehensive root cause analysis, which may for example be based on the data about a supplier’s delivery performance, the supplier’s quality, as well as other supply chain attributes.

In the third-place big data can provide the opportunity for faster access to appropriate data and trends in ways that are easier to interpret. A number of procurement teams are already using analytics for such things as spend analysis, cost modelling, and the monitoring of supplier performance, but this is only the tip of the iceberg. The approach can be developed further from here on in.

The fourth opportunity is to evaluate the volatility of commodity pricing. The use of predictive analysis can be employed to dissect commodity price volatility and forecast its potential impact on cost structures indicating how cost price variations can affect future levels of profitability.

Supply chain professional must liaise more closely with HR

What may come as a surprise to many supply chain professionals is that Hackett Group advise that supply chain procurement specialists need to work more closely with their colleagues in HR with regard to a couple of key areas.

The first area relates to the creation of new roles in technology that do not already exist within company structures. Procurement should have a hand in deciding the balance between which roles and responsibilities should come under the IT umbrella, and which should come under the procurement umbrella. According to Hackett, advanced data modelling skills should come under procurement.

The second area is the cultivation and mobilisation of technological potential. Hackett believe that procurement have to take responsibility for setting out their own/strategy in terms of developing talent linked to big data and advanced analytics. Members of staff working in these areas will need to work in teams that need become more globally aware and that must cope with the constant change that that awareness brings.

A costly investment but one that will be well spent

In order to achieve this improvement to procurement performance, and to enhance value in terms of business contribution, the concept of big data needs to be thoroughly embraced. This will necessitate a significant investment in terms of time and resources, but with all the potential benefits on offer, it will be an investment wisely spent.

The Hackett Group firmly believe that the way to improve and maximise enterprise agility is through the evaluation and use of both big data and advanced analytics.

What benefits do you think Big Data and the use of advanced analytics bring to your company’s supply chain?

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