In today’s business environment, medium-sized enterprises are under increasing pressure to manage their cost base. These enterprises need to continuously monitor their expenditure & cash flow in order to make it through the tough local & global economic conditions. Access to procurement data that is properly cleansed, prepared, and visualized can provide meaningful insights which inform key business decisions that affect the financial position of the organisation. However, many medium-sized enterprises lack the internal procurement analytics expertise to uncover the insights within their organisation’s data.
So, having engaged with our team of procurement experts, we’ve compiled a list of tips to help medium-sized enterprises harness the hidden insights within their organisation’s procurement data.
1. Engage with your data regularly.
The simplest way to get started is to get to know your procurement data. Building the habit of regularly engaging with your procurement data will enable you to understand the existing trends within your organisation. Furthermore, you will develop the ability to quickly identify anomalies as & when they occur. There are a number of ways to do this:
- Identify a simple set of procurement metrics to keep track of frequently. Some examples of this include:
- Total procurement spend per week/month,
- Number of purchase orders raised daily/weekly,
- Number of new vendors on-boarded
- Incorporate procurement metrics into your existing internal reports, and as a discussion point in your recurring meetings.
- Make use of data visualisation tools (e.g., Microsoft Power BI, Tableau, etc.) to build dashboards that will allow you to easily view & analyse your procurement KPIs.
2. Manage & maintain your procurement data.
As the saying goes, “garbage in leads to garbage out”. Regularly engaging with your procurement data will be a fruitless exercise without ensuring that the information you’re reviewing is correct. To avoid using inaccurate information in your decision-making process, it is important to have a data management plan in place. This plan should cater for the following:
- Putting the appropriate processes & controls in place to ensure that data is entered & stored in your systems accurately, and in the appropriate format.
- Ensuring that the data used for reports & dashboards is properly cleansed and prepared.
- Assigning designated staff to manage & maintain your procurement data. Alternatively, you may consider using a third-party service provider to manage your procurement data or assist with the regular cleansing, preparation, and enrichment of your data.
3. Make your data relevant to your current context.
Once you get comfortable with managing & engaging with your procurement data, you will start to uncover new sources of data related to your organisation’s procurement activities. As this happens, the complexity of your analyses will begin to increase. However, it is important to remember that data & information is only valuable if it is useful & relevant. Therefore, you need to make sure that the procurement metrics you are tracking speak to your organisation’s current context & strategic objectives. Examples of this includes the following:
- Objective: To increase the organisation’s B-BBEE (Broad-based Black Economic Empowerment) rating.
Metrics to monitor: New vendor on-boarding & Spend with organisations categorised as Black owned, Black women owned, EMEs (Exempted Micro Enterprises), QSEs (Qualifying Small Enterprises), etc.
- Objective: To increase the availability of short-term working capital.
Metrics to monitor: Adherence to vendor payment terms, Taking advantage of discounting on early payments, etc.
- Objective: To achieve year-on-year cost-savings
Metrics to monitor: Unit costs on inventory items, Consolidation of disparate purchases across multiple vendors to a single vendor, etc.
We at ProcureSense understand how valuable good procurement data can be to medium-sized enterprises. That is why our team has developed a suite of Procurement Spend Analytics & KPI Measurement tools which can be tailored to suit your organisation’s financial & strategic objectives. If you’d like more information on how we can assist your organisation with leveraging your procurement data, contact us today, and one of our procurement experts will get in touch with you soon.