Data is the bedrock of modern digital business practices. Without a solid data foundation, workers can’t make effective decisions. At the same time, other technologies that rely on data—like artificial intelligence—also malfunction. If your data is bad, your entire digital stack can end up rotten to the core.
This is especially true of procurement, as the discipline goes through a strategic and technological transformation. As noted in an Amazon Business report, “high visibility and fast access to data are critical when negotiating with suppliers.” Aster Anagaw, Head of Amazon Business’ Commercial, Public & Strategic Sector, adds that “buyers need enhanced visibility into purchasing data and supplier information to cultivate the ability to make swift and assured decisions.”
Procurement, in theory, should be a rich repository of information. The function has th capacity to gather data from both the supplier ecosystem and from inside the organisation. However, according to a Globality report from 2023, a staggering 82% of CPOs believe that their organisation’s indirect spend is poorly managed. As a result, they believe cost savings are being squandered. The vast majority of procurement requests for proposals are still being carried out using emails and spreadsheets.
The result is that neither procurement or the business at large can trust the quality of their data. At least, they can’t trust it to the degree needed to springboard more strategic activities and digital transformation. A recent SpendHQ survey found that 75% of procurement executives doubt the accuracy of their procurement data they present. As a result, 79% of non-procurement executives are only “somewhat or not at all confident” in using procurement’s data to make strategic decisions.
Moreover, 79% of survey participants indicated that their procurement teams lack dedicated management software for tracking and overseeing performance. Instead, they rely on spreadsheets, which mirrors the findings of the Globality report.
Digitally Transforming Procurement Data Management
Procurement data management is the systematic gathering, arrangement, and oversight of all pertinent information associated with the procurement process.
The process of data management, in theory, accounts for the multifaceted nature of procurement beyond purchasing, spanning the entirety of the process, including compiling and managing supplier profiles, product specifications, pricing details, and delivery schedules.
Developing a robust procurement data management system begins with data identification. This entails determining the necessary information for effective decision-making throughout the procurement process. Data identification is one of the key areas where procurement data management struggles. Finding the right data (and ensuring its trustworthiness) is critical. If done incorrectly, it throws the rest of the process off kilter.
Nevertheless, procurement data management involves accumulating a wide array of data. This incluces pricing, specifications, supplier performance metrics, delivery times, and historical procurement spend. Once identified, the data is organised into a coherent structure, facilitating easy access and retrieval. Cloud-based ERP software and dedicated procurement data management tools can be applied here to enable users to efficiently query the data.
Obviously, ensuring data accuracy is crucial, achieved through regular audits, reviews, and quality control procedures for data entry. Only valid information should be stored and used for analysis to maintain the integrity of the system.
Only when procurement data is gathered, organised and, most importantly, authenticated, can it be put to work driving the kind of strategic and digital transformation that will allow procurement teams to meet the challenges of today, and capitalise on the opportunities of tomorrow.
Pierre Laprée, chief product officer of SpendHQ, noted in the report that, “by using the right technologies, such as spend intelligence and analytics, along with embracing procurement performance management as a general approach to enterprise collaboration, procurement can show finance and other key stakeholders reliable and indisputable data and become a trusted business partner.”
