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Deck the halls with procurement performance intelligence

admin by admin
December 10, 2022
in Supply Chain


‘Tis the season to build those jolly-good annual budgets and plans while factoring in the uncertainties about inflation, supply chains and resources. As Procurement anticipates the year ahead, the must-have list should include a solution that can equip and empower team members and leaders with powerful intelligence to drive better business performance not just at the start of the year, but in a dynamic, ongoing way.

A big-picture strategy needs to be informed by accurate data, converted into tangible plans and optimized based on how it’s going. More organizations are seizing the opportunity to target that “management middle” to connect strategy with its execution in Procurement. It’s an area that had been historically under-addressed by procurement tech, but that’s been changing in recent years due to the growth in new solution offerings available.

So, what difference is needed? As Spend Matters analysts noted in 2022: “One needs to take the perspective of the future direction of the procurement technology market — which, we would argue, requires thinking beyond the framework of the traditional source-to-pay (S2P) suite.”

That means a focus on implementing a solution that lets you harness great insights to provide for much-improved management oversight. Most of the data you need is already there and, once the right toolset gets it organized and ready to work for you, it can be joy to Procurement and beyond.

Five golden steps

To make the business case for a technology initiative, here are five areas where enhanced Procurement performance intelligence can “deck the halls” of your organization and sharpen your outcomes:

  1. Level-up Procurement’s collaboration with Finance. Particularly in times of economic uncertainty, procurement can take a greater leadership role in identifying clear savings targets that may make more sense than applying a general top-down mandate of “let’s cut costs by 15% across the board.” Procurement intelligence fuels a data-driven discussion and more confident recommendations backed by reports on performance results, benchmarking, preferred supplier utilization, consolidation opportunities, payment terms enforcement and more. It’s empowering to be able to bring clear ideas and opportunities to the table, such as: “Here are three to five areas we can target that will likely save us XX%.”
  2. Reduce risks that would impact your delivery against financial and non-financial performance targets. Gaining a total view of your current procurement project pipeline lets you oversee not only the big picture but also identify where things may be going off target. Delays or changes to forecasted results are best detected as soon as possible, so that adjustments can be made to resourcing, prioritization, sourcing criteria or even target goals. This is extremely difficult to do well when these projects are all tracked in different places, and in different ways, such as across a mix of spreadsheets, shared file systems, various sourcing tools, and generic project management systems. Implementing a central, transparent Procurement performance hub de-risks the business with better visibility.
  3. Maintain a good degree of leverage with suppliers. For some subcategories more affected by the impacts of inflation and/or supply chain constraints, there may be less room to negotiate purely on pricing. Having more data can reveal where else you can build value with preferred suppliers and/or through a strategic sourcing process. Supplier performance, ratings, spend history, benchmarks and more can all help.
  4. Advance ESG progress even amidst other challenges. For many businesses, environmental, social and governance goals are still commitments at the corporate level. A good procurement intelligence platform helps you quickly identify your spend history with suppliers who have diversity classifications and greenhouse gas emissions. Data will help reveal where progress has been made and the next areas that make sense to target, whether it’s by subcategory, region/location, item/SKU, or even specific suppliers.
  5. Ensure greater buy-in through collaboration. Having great information isn’t very helpful if that information is inaccessible. Instead, the right solution you implement enables greater transparency to this valuable information that can then spark better decisions and actions and improve spend compliance, priorities, goal setting and alignment, and trust.

How do you get there? Two key solution categories to build this foundation of strong procurement intelligence are spend analytics, to produce the spend insights and benchmarking, and a newer but customer-proven category of procurement performance management. Spend Matters analysts also described in July 2022 that this type of data-led approach using those solutions in combination can be thought of as a “strategic spend terminal.” It runs adjacent to your traditional source-to-pay suites, exchanging data at logical integration points.

Category management and strategic sourcing may be a part of the mix too. As you determine your specific projects and their goals, those solutions can help hone-in on more granular success criteria at the project level.

Procurement is clearly a value lever, that’s not in dispute these days. It’s time those teams and their stakeholders had a purpose-built solution to help them develop and track plans that support corporate goals, actively identify new ways to contribute and demonstrate what they ultimately deliver. Yes, it takes structure and leadership, but the right technology should be the gift that keeps on giving.



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