Procurement teams face an array of pain points, from supplier relationship management to pricing volatility and sustainability goals. One of the critical issues preventing many procurement teams from overcoming these pain points, however, is visibility.
The value chain is often long, winding, and frustratingly opaque. Gathering data on Scope 3 emissions has proven especially challenging in recent years, but the reliability of non-ESG information has proven to be a stumbling block as well. Even within the business itself, procurement teams can struggle to access data and make use of the information available to them.
A report from SpendHQ found that, last year, 75% of procurement leaders said they doubted the accuracy of their data. As a result, 79% of non-procurement executives lacked the confidence to use procurement’s data to make strategic decisions.
Digital procurement drives data quality
Procurement departments in many organisations are aiming to meet increasingly complex demands and pain points with digital transformation initiatives.
According to researchers at Deloitte, digital procurement solutions have the potential to drive better decision making and improve efficiency. They do this by improving the quality of data inputs used to direct procurement strategy.
Procurement leaders should be prioritising digital solutions that provide access to previously unavailable data, or that bring order to massive (but unstructured) data sets.
For example, most procurement departments have thousands of contracts, purchase orders, and other files in hardcopy or PDF form. These formats aren’t easy to pull information from, which prevents procurement teams from easily accessing the critical data they contain. As a result procurement lacks rapid access to detailed specs, negotiated T&Cs, indexed pricing, and breach of compliance penalties.
Deloitte highlights that “an intelligent content extraction solution enabled by machine learning will convert static documents into data points for review and action.”
In organisations struggling with unstructured and disparate sources of spend information, generative artificial intelligence and machine learning-powered tools can read, interpret, and recognise the information procurement professionals require. Procurement teams can then extract this information and use it to build a centralised, consistently maintained source of supplier spend.
Lastly, digital procurement solutions can also leverage AI to integrate third-party information like supplier data, commodity trends, social media insights, local media reports, duties and tariffs updates, as well as assessments of country and sociopolitical risks, into existing datasets. Many of these tools further enhance procurement’s own data with third-party datasets to support more sophisticated decision making.
