Procurement leaders have been hesitant to make the switch to utilize software into decision processes. Many fear that the investment will not drive additional value, current processes are sufficient, and procurement teams won’t buy in. Over time, the benefits of data-driven decision have become clear, and should be viewed as indispensable for procurement teams to make informed and strategic decisions. By providing procurement teams with these real-time insights, they are able to step out of the day-to-day and view the bigger picture: What suppliers pose the greatest risk? What suppliers do/do not further our diversity spend initiatives? What supplier is the most cost efficient to use for a new project? In the past, these decisions used to feel convoluted, but teaming up with data makes these decisions simple and clear. For those still debating to make the switch, here are 5 benefits to keep in mind as reasons to justify the investment.
One of the key benefits of data-driven decision making is that it allows for process agility and improved decision making. Modern procurement software ingests data from manual processes, organizes it, and presents tailored analytics. From this, procurement teams can easily see areas of concern and areas of strength across the business, and parts of current operations that do not further company wide initiatives. By equipping teams with these real time data insights, the procurement process becomes much more agile through data driven decision making and increased efficiency in evaluating manual processes. Procurement teams spend less time data gathering and organizing and more time doing what they do best: navigating relationships with suppliers, monitoring spend, furthering company-wide goals, and facilitating the procurement process, helping to improve overall efficiency and effectiveness.
Data-driven decision making can also help procurement teams to be more transparent in their processes. Historical manual storage and organization of data allowed for frequent miscommunication with suppliers, delayed completion of projects due to unorganized due diligence, and other pain points. By using data to track and analyze purchases, teams can easily see the connection of each business unit into the supply chain, proactively communicate key information to facilitate projects and maintain relationships, and other key data points. This helps to build trust and improve relationships with suppliers, as well as increase transparency within each business unit in the organization.
In addition to improving transparency, data-driven decision making can also help procurement teams to mitigate risk and ensure compliance with regulations. Insights provided by procurement software often highlight suppliers that operate in zones that are highly government-regulated, violate human rights laws, or present other risks throughout the supply chain. Too much reliance on these vendors can cause significant disruption to operations depending on the macroeconomic environment. Knowing which suppliers pose the most risk through comprehensive data that outlines current suppliers locations, offerings, and other local news can prevent these disruptions to projects and save money. Aside from proactively mitigating risk, teams can also use this data to ensure that they are adhering to all relevant regulations and laws, which can help to reduce the risk of fines and legal action.
Another key benefit of data-driven decision making is that it can improve collaboration with suppliers and partners. Vendor Relationship Management is a key part of having a smooth and strategic procurement process and must be at the forefront of companies who work with a large, diverse set of suppliers. and a strong software platform can facilitate this. Most platforms connect existing suppliers into the software directly, which allow for direct communication or insights shared regarding current projects. By consistently sharing information and proactively communicating with these external partners, procurement teams can work more closely with their suppliers to identify new opportunities, optimize current processes, and improve overall efficiency. This can help to build stronger relationships with suppliers and partners, leading to more successful collaborations in the future.
Finally, data-driven decision making can help procurement teams to optimize cost and cash flow for their organizations. Historical manual processes of documenting and analyzing receipts by each vendor takes time and is ineffective. Procurement software like Parq can enrich this process by automating the billing process, tracking spend per vendor/per product category, and highlight areas of By providing insights into cost trends, supplier performance, and other factors that can impact the bottom line, spend data can help teams to make more informed and strategic decisions about which products and services to purchase and which vendors further their spend initiatives, such as diversity supplier spend. This can help to drive down costs, improve cash flow, and further company-wide goals for spend goals for the organization.
In conclusion, data-driven decision making can provide numerous benefits for procurement teams. From improving process agility and decision making to increasing transparency and collaboration, data can help teams to make more informed and strategic decisions, reduce risk and ensure compliance, and optimize cost and cash flow. By leveraging the power of data, procurement teams can drive greater efficiency, effectiveness, and success for their organization.
Parq was uniquely designed to help you manage relationships with your suppliers and automate the decision making process through critical insights and analytics. Interested in making the leap to optimize your procurement team? Reach out.