Procurement of the Future Will Be Run By Analytics

Procurement of the Future Will Be Run By Analytics

account_circle MavenVista calendar_today Feb 28, 2022

Global supply chain sufferings aren’t going to fade any time soon. Aspects such as continued virus outbreaks and trade volatility will persist to stress the market well in the future. AI-powered systems will be in increased demand, due to their advanced analytics capabilities.

1. What is procurement analytics?

– Procurement analytics is the methodology of accumulating and analyzing procurement data to create meaningful insights and support practical business decision-making. Examples vary from historic procurement spend analysis reports to evolved analytics to predict and budget future decisions.

Procurement analysis generally involves gathering data from a number of distinct source systems such as ERPs, categorizing data to standard or use-case specific taxonomies, and depicting data in a visualization dashboard or within business intelligence tools.

2. Why does analytics plays an important role in supply chain and procurement?

– Analytics is widely considered as one of the most significant resources and disruptive forces in procurement. Based on a recent survey by Deloitte, most Chief Procurement Officers (CPOs) view analytics as to the technology space with the most influence on business.

What’s more, Ernest and Young identified analytics as to the most disruptive force in procurement over the following decade.

3. What are the most important pain points in supply chain and procurement that analytics and AI could solve?

– One of procurement’s major pain points is the contract negotiation stage. It often takes big companies three to six months to negotiate even the smallest contracts, because it’s generally a highly manual process that is time labor-intensive. 

AI-powered automation speeds up contract negotiation. It facilitates decision-making on workflows, minimizing the potential for a contract to get delayed with an irrelevant party.

It encourages learning a company’s playbook and terms so that redlining a contract takes a short time instead of weeks’ or months’ worth of back-and-forth between the legal department and procurement department.

4. Advantages of AI-powered automation in the procurement function. 

– Automation will enable procurement teams to cut through inefficiencies emerging from the fact that they and legal are scrutinizing the same document through very different lenses.

Procurement is focused on optimizing commercial terms, while legal wants to minimize risks and comply with regulations. Automation will also enable organizations to reduce the workload on legal by suggesting which contracts consist of standard material that the legal tea doesn’t need to review again, and which require an added level of scrutiny.

This can save up to 70% of the time usually spent on contracts review. With automated tools, teams can import edits from appropriate, previously reviewed contracts. It also delivers valuable data on the organization’s historical approach to managing risk.

And when a procurement team works with a new supplier, it can upload the new contract into the automated system. AI-powered tools will catch similarities and anomalies with simplicity.

Smart procurement automation software such as VENDX enables procurement teams to cut through inefficiencies, provides various analytics to support businesses make sound decisions.