Jack Macfarlane, Founder and CEO of DeepStream, highlights the significance of financial efficiency in procurement, the difficulties associated with manual cost optimisation and how digital solutions can effectively tackle these challenges.

Procurement teams are always on the lookout for innovative strategies to streamline their operations and boost financial efficiency and outcomes. 

However, this task can be challenging due to the inherent inefficiencies that often exist in long-established manual processes. A straightforward remedy to these issues lies in controlling expenditures via e-procurement tools. 

Utilising digital platforms allows procurement specialists to enhance their cost-saving abilities and streamline processes. 

The importance of financial efficiency 

Procurement is a fundamentally important function of any business. Its aim is to procure goods and services in the most cost-efficient manner. Done properly, this ensures business expenditure aligns with the overarching financial goals. Ideally this results in the company’s longevity and success. 

Economic pressures shed a stark light on the importance of cost-efficiency for businesses. With inflation currently standing at 3%, it makes sense that procurement teams are prioritising cost optimisation in 2024. A recent survey revealed that 65% of procurement teams in the UK consider cost control their most crucial focus. 

It is the ongoing economic uncertainty that is further driving the need for financial efficiency, as global fluctuations and geo-political unrest force businesses to maximise savings and optimise resources to maintain supply chain resilience and stay competitive in a demanding global market. 

Experienced chief procurement officers know that maintaining profit margins can be a make-or-break scenario for any business, big and small. This is evidenced by the findings of The Hacket Group’s 2024 Global Business Services Key Issues report. The report states that 82% of procurement leaders rate “margin improvement and protection” as a critical business objective for 2024.

Digital solutions to beat procurement pain points

To ensure these goals and objectives are achieved, procurement teams are increasingly adopting digital solutions. These solutions are supposed to streamline processes, ensuring greater cost-savings and financial efficiency. By 2027, 70% of procurement teams will have implemented digital procurement solutions. 

These technologies help streamline processes, reduce inefficiencies and cut costs. Pandemic-induced supply chain disruptions, along with global geo-political instability, have highlighted the importance of building agile and resilient supply chains. These disruptions have prompted procurement teams to further prioritise risk mitigation in protecting financial efficiency and profit margins for the sake of business continuity.

Pressure from stakeholders such as investors, customers and regulatory bodies, demands that companies demonstrate fiscal intelligence and caution to enhance efficiency, ensure suitability for partnerships and meet sustainability expectations. 

The challenge associated with traditional cost-reduction techniques

Manual processes are time-consuming and demand significant administrative effort, diverting focus from strategic activities. Tracking and analysing spending patterns manually can be cumbersome, hindering the quick identification and response to trends or discrepancies. This inefficiency also affects transparency. It can lead to inconsistencies in vendor selection and contract management. Not only this, but it can heighten the risk of non-compliance with policies and regulations or, indeed, fraudulent activity.

Human error is a significant challenge, resulting in inaccurate data entry, miscalculations, and missed opportunities for cost reductions. These errors undermine data reliability and lead to poor decision-making.

Relying on manual processes for financial optimisation is outdated and fraught with issues that impede organisational efficiency and hinder cost-reduction strategies in procurement because the absence of a centralised system complicates the consolidation of procurement data across departments

Digital and centralised systems help procurement teams accurately account for all associated costs beyond the initial purchase price and predict demand with precision to avoid overstock or stockouts.

How e-procurement streamlines financial efficiency

E-procurement platforms and software offer substantial benefits for enhancing financial efficiency within organisations. One of the primary advantages is the automation of data, which significantly reduces the risk of human errors and ensures that procurement decisions are based on accurate and reliable real-time data. Beyond this, the move to digitalisation brings multiple additional benefits.

E-procurement tools feature multi-stage response capabilities, allowing users to request new offers at various stages of supplier negotiation. This flexibility enables procurement teams to negotiate better prices and terms, such as delivery dates and lead times, uncovering real-time cost-saving opportunities throughout the procurement process. 

Automated e-auctions simplify the negotiation process, minimising the time spent on back-and-forth communications with suppliers. This efficiency allows teams to secure competitive prices quickly, freeing up time for other critical responsibilities and improving supplier relationship management.

Procurement software offers an efficient and accurate tracking system, providing users with enhanced visibility over their spending. This capability allows organisations to monitor savings achieved from multiple contracts and partnerships, ensuring comprehensive cost-saving measures. General reporting dashboards in e-procurement software provide an overview of request spending and savings analytics. These tools enable users to track data, identify where savings are being maximised, and make informed decisions to further enhance financial efficiency.

E-procurement’s proactive approach includes features like customisable workflows and automated reminders, ensuring timely and accurate processing of procurement activities. This approach streamlines the overall procurement process, driving efficiency and cost-effectiveness. By leveraging these capabilities, e-procurement platforms help organisations streamline operations, reduce inefficiencies, and achieve sustainable cost optimisation. 

Through automation and advanced tools, procurement teams can enhance their decision-making processes, negotiate better deals, and maintain a high level of financial control and transparency.

Data analytics are poised to revolutionise the procurement process, but many CPOs aren’t ready for a data-driven transformation.

The role of procurement has changed. Spurred by an ever more complex supply chain landscape, procurement departments are shifting away from traditional cost containment and purchasing. Now procurement teams are moving towards being strategic relationship managers, sustainability champions, and drivers of technological maturity. 

Procurement increasingly relies on technological solutions to combat its challenges. THese difficulties range from geopolitical disruption to price volatility and a worsening climate crisis. At the same time, helping the business remain cost competitive is still a necessary goal for the function. 

Using analytics, CPOs can revolutionise traditional elements of the procurement process like spend analytics, demand forecasting, and significant portions of the supplier relationship management process. However, in order to effect this procurement revolution, CPOs need to trust their data. 

The procurement revolution runs on data

Procurement is the membranous layer between the internal organisation and its external supplier ecosystem. As such, procurement has access to huge amounts of data. In the procurement function, internal data like demand patterns, spending, budgets, and specifications, meets external information like supplier spend, market insights, and contextual data ranging from weather forecasts to crop reports. 

In order to harness the full potential of procurement, CPOs must tap into their rich reserves of data. Appropriately armed, they can better, more informed decisions that unlock strategic wins for the business. Data—along with the application of AI—can help procurement teams optimise spend and predict demand. In more predictable industries with fairly stable parameters, some experts even believe that bots could replace humans entirely. “For standardised items with highly competitive markets such as transportations or temporary labour, buyers would not need to interfere, leaving bots to make trade decisions autonomously based on predefined objective functions,” McKinsey analysts wrote in a report earlier this year.  

However, there are serious hurdles that organisations looking to leverage data in their procurement processes face. 

CPOs might expect data analytics and the technologies they power to revolutionise every aspect of their procurement function by the end of the decade, but respondents to McKinsey’s survey readily admit that their data infrastructure isn’t ready to support this ambition. Over 20% of procurement leaders said their data suffers from silos and a lack of maturity, with less than 70% of spend data stored in one place. Even those leaders whose systems give them a single source of truth for all spending data admitted that their data wasn’t not cleaned and categorised effectively. 

Before it can revolutionise the procurement process, procurement’s data is in desperate need of improvement. 

Data analytics drive the AI procurement revolution 

By leveraging AI, CPOs can automate significant portions of their category management processes. Demand forecasting and optimisation can become more accurate, which makes sourcing and supply chain management more effective. Supposedly, AI interfaces will allow procurement teams to analyse spending and market data, answering questions about spend exposure created by specific events, cost increases due to oil price fluctuations, or alternative sources for suppliers experiencing difficulties. 

Generative AI may soon be able to automate contract generation and generate data used for risk management training—vital in an increasingly disrupted world. 

Steve Green, Business Development Manager at Genetec investigates hidden risks in the supply chain and how to avoid them.

Technology is advancing at an exponential rate. Now, advances in AI and analytics mean devices will likely expand their functionality and capabilities well beyond the date of their original procurement. 

That means that for any IT-related investment, it’s not enough to focus solely on traditional factors such as the legality, functionality, suitability, and cost of the product itself at the point of purchase. It’s just as important to understand the viability, trustworthiness and any likely risks that could result from association with its manufacturer and suppliers for the entire predicted lifetime of that product.  

This is particularly relevant to the realms of video surveillance and the Internet of Things (IoT). Increasingly, governments are tightening regulationsto prevent the ongoing use of devices associated with human rights abuses or that present an unacceptable level of cybersecurity threat

Supply chain blind spots

According to the Cyber Security Breaches Survey 2024, commissioned by UK cyber resilience to align with the National Cyber Strategy, just 11% of businesses assess the risks posed by their immediate suppliers. In a predominantly digital age, that is deeply concerning. 

It suggests there is not enough emphasis on the origin of devices responsible for the breaches or manufacturers who made them. Without this, how can any organisation ever hope to demonstrate compliance with its own commitments to uphold the highest standards of cybersecurity and ethics in procurement? 

If they don’t appropriately audit and document these issues, how can organisations possible identify the technical, financial and reputational risks of selecting one manufacturer over another?

Risk management in procurement

Risk can never be reduced to zero, so it must constantly be reassessed based on an organisation’s activities, sensitivities, and risk tolerance. These risks will manifest in several different forms, some of which the procurement function can actively control and others which it can only react to. With the appropriate forethought, however, organisations can idenitify many of the most likely risks in advance. They can therefore take steps to reduce, mitigate or transfer the risks before disruption strikes. 

For example, when evaluating any IoT related ‘smart’ device or solution, cybersecurity must be a key consideration. Organisations could reduce risk by stipulating that they will only consider working alongside suppliers who have achieved relevant accreditations and who submit themselves to regular third-party penetration testing. 

They could then look to mitigate this further by doing their own due diligence of the cybersecurity track record for each tender response. Finally, they may choose to transfer some of the remaining risks by revisiting the organisation’s cyber insurance coverage. 

Building bridges between IT & procurement 

As outlined above, a growing threat is that of scheduled upgrades increasingly leading to the adoption of ‘smart’ IP connected devices, requested and managed by departments other than IT. These devices no doubt provide valuable new functionality. However, they also come with additional responsibility for their on-going management that organisations need to consider.  

Responsible procurement professionals have a duty to ensure they bring in the right individuals from across the business to ensure their appropriate evaluation. This is where the proactive involvement of the IT department becomes so vital. It brings much needed familiarity and expertise with the process of ensuring a product is viable. With the involvement of the IT team, it’s much easier to determine if a product can be securely and cost-effectively adopted over a multi-year period. It therefore puts procurement professionals in the best position to take an informed view of which of the presented options are in the best long-term financial interests of the business. 

‘Digital asbestos’ & CCTV blind spots

Technology used for video surveillance and physical security is many organisations’ biggest blind spot. This is because these cameras typically make up the largest software system deployed within a business not managed by IT. Internally, man organisations still think of security cameras as the “closed-circuit” analogue devices that were in circulation 20 years ago. 

Consequently, as a society we have witnessed, and continue to see, the widespread adoption of insecure cameras and other IoT devices. These devices are manufactured by state-owned companies with strategic interest in exfiltrating data, intelligence or intellectual property from rival governments, private businesses, and individuals. This is especially true when the country and the companies in question have a widely demonstrated and well-documented set of cyber risks associated with them. 

In the UK, the Central Government has banned devices manufactured by Chinese state-controlled companies on national security grounds. And yet, organisations across the public and private sectors continue to deploy these devices at scale. That isn’t sustainable or wise.  

Of course, we shouldn’t blame procurement professionals for the purchasing decisions taken before these risks became widely known. It’s the same as asbestos several decades ago. Today, however, the risks are known and documented. Procurement professionals have a duty to stop adding to the problem and take steps to mitigate the risks. As with asbestos, the first step once the dangers were clear, was to no longer add to the problem. The second was to put plans in place to deal with what had been put in place by an earlier generation. 

Final thoughts

No procurement leader wants to be the person who ignored the warning signs and forced the organisation into “buying cheap, buying twice”. Or even worse, exposed the organisation to damage from which it was unable to recover. Price is of course an important factor, but the true goal should be to achieve value. 

The Procurement function has never been more important in terms of building the culture, people and processes needed to ensure buying decisions are taken that are in the best long-term interests of the business. For procurement professionals, and those sat around the boardroom table, it all comes down to understanding the risks, accepting responsibility and having the determination to invest

Our cover story this month…  Marriott International Inc: A more sustainable supply chain  With science-based targets approved, Marriott is accelerating…

Our cover story this month… 

Marriott International Inc: A more sustainable supply chain 

With science-based targets approved, Marriott is accelerating work to help make its supply chain more sustainable. We speak to Stéphane Masson, Senior Vice President, Procurement, Marriott International, Inc. – for our exclusive cover story this month – to find out how… 

“Like many global companies, Marriott recognises that serving our world helps the communities where we operate and is also good business,” Masson tells us. “This Earth Day, we announced the approval of our near-and-long-term science-based emissions reduction targets by the Science-Based Targets initiative (SBTi), with a goal to reach net-zero greenhouse gas (GHG) emissions by no later than 2050. Approval of these targets is bringing heightened focus on our work to embed sustainability in our operations.  

Specifically, the company has committed to reduce absolute scope 1 and 2 GHG emissions 46.2% by 2030 from a 2019 base year. Marriott also commits to reduce absolute scope 3 GHG emissions from fuel and energy-related activities, waste generated in operations, employee commuting, and franchises 27.5% within the same timeframe.  

Importantly for our team and the suppliers we work with across the globe, Marriott’s targets include 22% of our suppliers by emissions—covering purchased goods and services, capital goods, and upstream transportation and distribution—which will have science-based targets by 2028. 

In the longer term, Marriott also aims to reduce absolute scope 1 and 2 GHG emissions 90% by 2050 from a 2019 base year and reduce absolute scope 3 GHG emissions 90% within the same timeframe.  

Our Global Procurement organisation plays an important role in setting up Marriott as we work to achieve the targets within this timeline. And it will require an evolution in how we engage Marriott associates, our suppliers, and other members of the industry.” 

Read the full story here! 

Grupo Modelo: Procurement and sustainability in action! 

We speak to Soqui Calderon, Regional Director of Sustainability for Grupo Modelo and the Middle Americas Zone, to see how the beverage giant is tackling sustainability from a procurement perspective… 

Grupo Modelo is a giant. A leader in the production, distribution and sale of beer in Mexico, Grupo Modelo is part of the Middle America Region (of the AB InBev Group) and boasts 17 national brands, among which are Corona Extra, the most valuable brand in Latin America, as well as Modelo Especial, Victoria, Pacífico and Negra Modelo. The company also exports eight brands and has a presence in more than 180 countries while operating 11 brewing plants in Mexico. 

Through more than nine decades, Grupo Modelo has invested and grown within – and with – Mexico, generating more than 30,000 direct jobs in its breweries and vertical operations, located throughout the country. 

Grupo Modelo, like many forward-thinking companies, is currently focused on a drive towards establishing a truly sustainable business. This endeavour is best exemplified in the Middle Americas Zone (MAZ), where sustainability efforts have been led by for the past five years by Soqui Calderon Aranibar, Regional Sustainability and ESG Director. Ambitious targets have been established for the region, but some remarkable achievements have already been made. As Calderon says: “For our team, sustainability is not just part of our business, it IS our business.” 

Read the full story here! 

SDI International: Delivering tail spend excellence 

SDI International’s Brendan Curran and Joaquín Morales discuss empowering procurement innovation, the importance of effective tail spend management, and how its Master Vendor programme transforms the function 

In a world of greater complexity and risk, technology adoption and digitalisation, and an ever-evolving compliance and regulatory environment, procurement teams still grapple with a perennial challenge: cost reduction. Which is why tail spend management – often overlooked and unmanaged while procurement focuses its attention on strategic, high-spend categories – is so important. Indeed, for many organisations, taking effective control of costly, one-off buys and high-volume, low-value purchases involving numerous suppliers can deliver as much as 5% to 10% of cost savings, according to Boston Consulting Group. 

But tail spend, by its nature, is complicated. It requires significant focus to effectively manage high volumes of data, often has a perceived lack of strategic importance within both procurement and the wider organisation, lacks visibility, involves vast numbers of transactions, many product categories, and a largely anonymous supplier base, and can bring potential compliance risks because of poor onboarding processes or inconsistent terms and conditions.  

Tackling the problem can be daunting for procurement teams. But, according to SDI International, it doesn’t have to be. The organisation, one of the world’s largest diversity and woman-owned procurement outsourcing and technology providers, delivers industry-leading holistic tail management solutions based on a successful formula: simplify, digitalise, innovate. Its Master Vendor programme provides procurement teams looking to tackle their tail with a one-stop solution for tail spend that leverages the latest and most efficient technologies to handle supplier onboarding and on-time payment, and manage the entire tail supply chain, stakeholder servicing, and escalations. The result is a procurement department better able to drive cost saving, efficiencies, and more strategic outcomes.  

Read the full story here! 

One of procurement’s biggest pain points is disorganised data. Making this data accessible should be at the heart of procurement digital transformation efforts.

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. 

A change in procurement criteria could save the NHS billions of pounds each year while improving patient care.

The UK’s National Health Service (NHS) could save potentially “billions” of pounds a year with the introduction of new procurement criteria for medical supplies. 

Following an 18 month campaign by Essity, a hygiene product manufacturer, the NHS is reportedly planning to alter the criteria by which it procures medical supplies. The campaign hinged on the need for value-based procurement practices in the NHS, which faced recent scrutiny in a recent report by the National Audit Office (NAO). An NAO report found earlier this year that the NHS, which has approximately 1.6 million interactions with patients every day, is not fully utilising its spending power to save money when purchasing medical equipment and consumables. 

The report also, according to an open letter to the Government Essity submitted in January, found that delivering the right products for the NHS at the cheapest sustainable price is essential to make every pound count for patients. However, Essity expressed concerns that “the current focus by NHS procurement on acquisition costs alone is failing to acknowledge the importance of value for money across the whole patient pathway, and that lowest price does not always translate to best value.”

In support of its campaign, Essity also demonstrated that, by opting for the cheapest incontinence products on the market, the NHS is incurring an additional £520,418,989 annually as a result of the products’ poor quality. 

The Mirror reports that a pilot project in several NHS Community Trust care homes found that higher cost items resulted in long-term savings due to higher better-quality and more suitable products, not to mention improvements to patient care. 

Next steps for value-based NHS procurement

The new guidelines for value-based procurement in the NHS will likely take effect later this year. Karen McNamara, business director for Essity’s Health and Medical division in the UK, hailed the decision as “wonderful news for our NHS. Finally, patients can look forward to a better quality of care no matter their illness or condition.”

Lord Philip Hunt, a member of the House of Lords and a fervent supporter of Essity’s proposal, announced the policy alteration. Lord Hunt has been a vocal advocate for value-based procurement since meeting with representatives of the company in 2023. 

“Who would have thought that the humble absorbent continence pad could have such an impact, so quickly, on something as important as NHS procurement policy and practice—but it shows what can be delivered when a campaign for change is built upon irrefutable evidence that a change will be a win-win for patients, for carers and for NHS and social care providers alike, particularly when it is taken forward in a constructive, cross-party campaign,” said Lord Hunt. 

Procurement needs better data to drive a more strategic, digitally empowered function, and embracing better principles of data collection can be an effective start.

Reliable data is pivotal in the procurement process. Traditionally, high quality data has helped organisations maintain transparency and fairness throughout the supplier selection process. This helps ensure that bias and corruption have no room to flourish, as well as driving efficiency. 

Increasingly, the more strategic and digitally-driven nature of the procurement function is leveraging big data into more valuable insights. Big data analytics powered by artificial intelligence (AI) are vital when it comes to identifying risk. Analaytics also also critical to predicting trends in complex systems, optimising sourcing strategies, and reducing costs through efficiency. 

However, advanced data analytics are heavily reliant on the quality of the data used to fuel decision-making. The same is very much true for AI, machine learning, and automation. Unfortunately, data quality is an area where procurement teams have historically struggled. Obscurity beyond the first tier of suppliers, siloed information, and even having too much irrelevant data can all undermine the quality and usefulness of your company’s data. 

How do we get better procurement data? 

Better data can drive a more strategic, digitally empowered procurement function. In order to get that data, embracing better principles of data collection can be an effective start. 

First, procurement needs to standardise the ways it reports, collects, organises and stores data. This helps ensure data integrity and quality. Standardised data collection also helps define clear processes and classifications across the organisation. Procurement sits between the organisation and the supplier ecosystem. Therefore, it has the potential to be a major repository of valuable data and even more valuable insights. However, procurement needs to organisae that data in a uniform way. Adopting a common taxonomy can facilitate data reuse, eliminating redundancy and promoting consistency across sources for more accurate insights.

Once data has been standardised, uniting internal and external information, ensuring that the information is accessible is vital. Data that is readily available and digestible fosters a culture where information drives decisions. A centralised, transparent repository where trustworthy information can be readily accessed to support decision-making creates a more agile, resilient procurement function. 

Providing access and training for analytics tools empowers employees with data manipulation skills, while central storage enhances information retrieval. Access controls can safeguard sensitive data, and department-wide cybersecurity training (with regular refresher courses) can help identify red flags and prevent vulnerabilities. 

Lastly, choosing the right data is more important than what you do with it. For efficient procurement strategy execution, understanding organisational goals is a vital step to guiding data collection. 

Unmanaged spend makes dark purchasing one of the biggest challenges facing procurement teams in uncertain economic times.

As 2024 continues, procurement leaders are increasingly finding themselves under pressure to deliver strategic wins and drive efficiency. 

Economic slowdowns, logistical disruptions, and looming political turmoil only serve to ramp up the urgency with which procurement teams need to find new ways to minimise costs while ensuring continuity throughout the value chain. Over 60% of procurement leaders report being worried about the impact of interest rates on their ability to invest during 2024, while

57% fear a recession during the year. 

As a result, procurement teams continue to invest heavily into digital transformation. Many are adopting AI, spend management platforms, and automation

However, efficiency gains within the procurement function itself might not be enough. This is especially true given the fact that many procurement budgets suffer from the influence of “dark purchasing”. 

What is dark purchasing? 

Dark purchasing occurs when companies source goods and services without the oversight or approval of procurement. Dark purchasing can stem from poorly organised procurement processes, leading to an opaque, decentralised purchasing structure. It can also occur as a form of corruption or negligence—again, thanks to a lack of procurement department oversight.  

Whatever the cause, dark purchasing typically often results in higher costs, increased risk, and a lack of control over the supply chain. This harms the organisation, as funds are misdirected—both harming the company’s bottom line and preventing procurement from gaining the visibility they need to drive efficiencies. 

The problem is almost ubiquitous. In 2023, a Globality report found that 82% of CPOs believe that their organisation’s indirect spend is poorly managed. 

Bad data keeps procurement in the dark 

A major contributor to dark purchasing is a lack of visibility stemming from bad procurement data. 

A troubling 75% of procurement executives doubt the accuracy of the data they present to the rest of the business. As a result, 79% of non-procurement executives  lack the confidence to use procurement’s data to make strategic decisions. Largely, this seems to stem from the fact many procurement teams still have manual processes embedded at critical points in their workflows. Specifically, speadsheets used for data entry and emails for communication account for the bulk of legacy procurement processes. Almost 80% of procurement professionals said their procurement teams do not have dedicated management software. This lack of software makes it significantly harder to track and manage their performance. Just under three-quarters were still using spreadsheets. 

Manual processes increase time spent and, correspondingly, capacity for human error. Therefore, manual procurement increases the chances that blind spots will emerge where dark procurement can flourish. 

Eliminating dark purchasing 

A recently published paper from AmeriQuest argues that eliminating dark purchasing can increase procurement savings by 25%. In order to eliminate the phenomenon, procurement teams need to target the twin levers of control and visibility. 

Largely, “dark purchasing depends on non-standardised processes and human error.” Therefore, eliminating the capacity for these within procurement and the organisation at large is a critical step. 

“One of the first steps companies can take to fight dark purchasing is to clearly identify and assign procurement responsibilities within an organisation,” they write. In particular, internal stakeholders and C-suite executives “need to buy into the importance of a transparent procurement process” for dark procurement to be meaningfully reduced.  

Automation and AI powered by big data have the potential to create more efficient, mutually beneficial supplier-buyer relationships.

Supplier management is a critical element of any procurement function. It creates a bridge between the needs of the business and the capabilities of the supplier. At the same time, supplier management helps CPOs meet spend reduction targets and strategic objectives like reducing Scope 3 emissions. 

The current procurement climate is one of sustained uncertainty. Economic pressures, climate instability and political turmoil can disrupt global supply chains at the drop of a hat. As a result, managing vendor relationships has grown more intricate and demanding. Not only this, but managing a supplier ecosystem effectively has never been more critical. 

With the introduction of advanced technologies, businesses now have new tools at their disposal. As a result, many CPOs hope that AI and automation will allow them to streamline vendor management processes, mitigate risks, and cut costs. However, the success or failure of these technology applications is often directly linked to the quality of the data underpinning it. Many supplier ecosystems are obscure places, and gathering useful, trustworthy data more than a few steps away from the organisation’s own walls has typically been seen as more trouble than it’s worth. 

Bad supplier data causes “substantial challenges” for procurement

In a 2020 survey by TealBook, insights emerged regarding the substantial challenges organisations face due to inadequate supplier data. Notably, they found that 93% of procurement professionals claimed to have experienced adverse consequences as a result of bad data regarding their suppliers. Approximately half of the respondents reported experiencing these effects regularly.

If data can be used effectively, however, it can not only create better outcomes for the organisation. Better data means increased procurement efficiencies, strategic wins, and more sustainable practice. It can also strengthen supplier-buyer relationships, making them more mutually beneficial, agile, and resilient. 

Good supplier data can be used to predict supplier punctuality, identify recurring issues in supplier lead times, and reduce costs. Not only this, but (trustworthy) data can be used to reliably benchmark supplier performance—and incentivise improvement. Tracking supplier successes and failures can not only expose when suppliers aren’t meeting expectations, but also when they exceed them.

Additionally, better data can lead to better predictions of when suppliers fall short (something that a lot of organisations struggle to see about themselves, but that can be identified from an outside perspective), which can allow organisations to step in and work with the supplier to solve or avoid the problems causing the disruption in the first place. 

Data should not just flow one way, however. Organisations that share relevant information with their suppliers can give a more fleshed out picture of their demand cycles and other critical elements of the business which can help suppliers work with them more strategically. 

Data analytics can be immensely valuable when trying to unlock the potential of the procurement process.

Procurement functions are increasingly being recognised for their potential to create value for the business at large. From cost containment and efficiency improvements to resilience, ESG reform, and relationship management, CPOs and their teams are balancing a seemingly ever-increasing number of plates. As a result, many procurement teams struggle to gain the necessary visibility and insights into the value chain needed to drive genuine transformation. 

This is why data analytics are so essential to modern procurement. Data analytics can create the necessary granular insight into the procurement process and supplier ecosystem to achieve procurement’s growing array of goals. However, all types of data analytics are not created equal. Finding the right analytical tools and methods and applying them to the right problems is essential for procurement leaders. 

Here are four types of procurement data analytics and the situations in which they are (and aren’t) applicable. 

1. Descriptive Analytics 

Descriptive analytics examine past procurement data to understand what happened in the past based on the data gathered at the time. 

This is the simplest type of analytics to apply to procurement, but descriptive analytics are vital when analysing spending patterns, evaluating supplier performance, and incorporating purchasing behaviour into a broader procurement strategy. 

Descriptive analytical tools are powered by data like historical purchases, requisitions, purchase orders, invoices, GRN, and tax receipts. They serve to help procurement teams understand historical data so that trends, patterns, and risks can be effectively identified.

2. Diagnostic Analytics 

Diagnostic analysis is a slightly more complex process. Descriptive analysis focuses on the “what” of past procurement data. Diagnostic analytics go deeper to understand the “why”. They get at the root cause of a problem or situation that occurred in the past. 

Diagnostic analytics are especially useful at investigating the causes of disruptions in the supply chain. By examining past and present data, diagnostic analytics tools can examine a supplier delay, for example, and provide insight into whether the event was an isolated incident or a recurring problem that might necessitate switching suppliers. 

3. Predictive Analytics 

As the name suggests, predictive analytics tools are used to predict future events based on past and present data. These tools, by necessity, tend to be much more sophisticated than descriptive and diagnostic analytics. They often employ artificial intelligence and machine learning to process vast amounts of data. 

Used correctly, predictive analytics can identify future spikes (or drops) in demand based on past trends. This can allow procurement teams to adjust stock volumes accordingly and take other actions to avoid disruption. Predictive analytics are also capable of looking at broader data sets, including publicly available information like weather patterns, to identify potential disruptions to supply chains that could harm procurement.  

4. Prescriptive Analytics  

Lastly, prescriptive analytics harness the potential of cutting edge AI and machine learning. Prescriptive analytics can not only analyse data and make predictions, but recommend courses of action based on its findings. 

As noted by Gartner, the “combination of predictive and prescriptive capabilities enables organisations to respond rapidly to changing requirements and constraints.” 

There are a wide array of use cases that merge predictive forecasting and simulation with prescriptive approaches. These can include predicting infection risks during surgery and instituting rules to mitigate these risks. They can also extend to forecasting product orders to optimise responses to fluctuating supply chain demands, circumventing the use of potentially flawed historical data.

Data is one of procurement’s most valuable resources, but fully utilising their data can be a challenge for CPOs.

There can seem like there is a significant gap between the rhetoric that big data analytics will unlock the secrets of efficient, optimised, resilient procurement, and the reality: that the process of leveraging procurement data into positive business outcomes is a lot more fraught than expected.

Procurement sits at the intersection between the business and its upstream supplier ecosystem. For this reason, the function has access to more (and potentially better) data than many other parts of the business. However, according to a report released last year by SpendHQ, 79% of non-procurement executives lack confidence in using procurement data to make strategic decisions. 

The issue doesn’t lie with CPOs, who on the whole understand the importance of accurate data. The problem is that the industry as a whole is clearly grappling with ensuring that procurement’s data is reliable. Not only does procurement data struggle with the reliability of its data, but this issue also undermines the efficiency with which it’s used. Here are 3 actionable steps procurement leaders can take to make better use of their data. 

1. Identify trustworthy data sources 

Procurement has access to vast amounts of data—from suppliers, from the business, and from within its own records. Used together, this information can create meaningful advantages. Data-driven analytics can drive more efficient decision-making, identify potential disruptions ahead of time, and help manage the supplier ecosystem. This process is often more complex in practice than in theory, however. 

Data within the organisation often becomes siloed between departments. A worrying majority of procurement teams still use solely email and spreadsheets to handle the RPF process, supplier management, and purchasing—siloing huge amounts of data. Lastly, the supplier ecosystem is famously opaque, with a 2023 survey of CPOs by Deloitte finding that fewer than 3% of procurement leaders felt they had “high visibility” beyond the first tier of their supplier network.  

CPOs hoping to make better use of their data must first adopt a comprehensive data organisation and quality control policy. When successfully implemented, such a policy ensures information can be trusted and subsequently acted upon. 

2. Look at the big picture 

Leveraging data requires a comprehensive top-down view of said data. Procurement analytics dashboards are vital tools that provide real-time insight into spending patterns, allowing procurement to manage and understand spend. 

By providing a comprehensive overview of spending details, such as the parties involved, items purchased, reasons for spending, locations, and timing, these dashboards enable procurement teams to negotiate better with suppliers and collaborate internally on cost-saving initiatives. 

3. Automate repetitive, high volume activities 

When applied to a comprehensive, reliable dataset, machine learning is an effective procurement augmentaiton tool. The technology excels at automating highly repetitive activities that consume the most time for procurement teams. Not only are these types of task time consuming, but their repetitive nature makes them the type of work most prone to human error. 

AI and machine learning are very good at simple procurement tasks like cost comparisons, tracking raw material prices, and predicting how small changes will affect the larger landscape of the supply chain.

Vendor Management Systems help centralise supplier data to increase visibility, reduce risk, and create value.

The importance of procurement to the larger business is increasing dramatically, along with the function’s visibility.

“Never before has procurement been core to so many executive-committee-level priorities,” the CPO of a large manufactuing company told McKinsey in a recent industry survey. “We now have a real seat at the top table. And this is not a temporary situation—this is how we will operate going forward.”

Increasingly, procurement plays the myriad roles of strategic innovator, efficiency leader, sustainably champion, budget saviour, and porous membrane between the business and a potentially vast network of suppliers and vendors. 

However, visibility is still a challenge for procurement leaders workign to maximise the strategic value of their function to the business.

Supplier ecosystems have traditionally been opaque environments, withv isibility issues arising almost immediately when looking outside the business’ own walls. Raw materials are hard to trace, third party contractors are anonymised and regularly replaced. Critically, suppliers don’t disclose their own suppliers and partners. All told, the general dearth of usable data can create issues including increased Scope 3 emissions and greater vulnerability to disruption. 

Tracking, visualising, and managing your supplier network is a complex task that is becoming increasingly essential for procurement functions to achieve more strategic goals. As businesses increasingly prioritise supply chain resilience through strategies like supplier diversity and nearshoring, there is a growing demand for enhanced visibility and control over supplier networks. 

A vendor management system should be an integral part of the solution to this puzzle. 

What is a vendor management system? 

A Vendor Management System (VMS) is a unified software platform designed to streamline and centralise data and operations pertaining to the interactions between procurement and  the supplier ecosystem.

A VMS has multiple functions, potentially handling everything from supplier registration to managing performance and contract lifecycle management. Using analytics, a VMS can intake large amounts of data to perform ongoing relationship analysis, helping procurement teams stay abreast of their partners and the success, or failure, of their relationship.  

What are the benefits of a data-driven vendor management system? 

Implementing a data-driven VMS offers key advantages to procurement teams. Assuming the data used to make decisions is trustworthy, a VMS can provide a comprehensive impression of supplier performance. It can enable a deep understanding of one supplier’s capabilities and reliability compared to another. Most importantly, this heightened visibility facilitates accelerated sourcing and speeds onboarding cycles. This, in turn, reduces time-to-market, and enhances the business’ agility when responding to market demands. 

By leveraging data gathered and analysed through the VMS, organisations can improve supplier quality over time. In addition to reduced spend, this will minimise disruptions and enhance operational efficiency. This proactive relationship management becomes feasible through data-driven insights, fostering stronger partnerships and facilitating collaboration with suppliers. 

Compliance also benefits, mitigating the risks that stem from an obscure supplier value chain by ensuring adherence to regulatory requirements. Additionally, implementing a VMS helps to reduce instances of maverick buying and dark spending. Curtailing these threats positively impacts revenue and makes budgets more predictable. Most importantly, it also shrinks potential grey areas in the organisation where corruption and fraud may arise. 

Ultimately, embracing an agile, data-rich VMS transforms procurement teams from reactive transaction management to strategic planning and innovation, empowering them to drive value and competitive advantage for the organisation.

The procurement data management process needs to be reformed

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.”

Public sector purchasing stands to gain the most from data-driven procurement, and so far has done the least.

Data-driven analytics have the potential to empower CPOs with greater understanding of their ecosystems, value chains, and internal operations. Big data can shine a light on places where there’s room to create efficiencies, contain costs, and mitigate risk.

In the June 2023 issue of Government Procurement, Steve Isaac notes that analytics can create significant benefits in areas like negotiation, vendor segmentation and yearly planning. He goes on to note, however, that “advanced analytics and data science haven’t exactly broken into the public procurement zeitgeist. It isn’t the subject of keynotes at the annual conferences and meetings … It isn’t a qualification line on most procurement job listings. For most agencies—even large ones—introducing advanced data science is not a priority.”

It’s not altogether shocking that, while the private sector is investing heavily in the potential benefits of data analytics and other digital procurement tools—with the global procurement software industry predicted to exhibit a CAGR of over 10% between now and 2032—public sector procurement lags behind. Isaac notes that it’s a “chicken and egg” issue with the case for a robust data science function hinging on the benefits of that investment being understood, which requires them to be felt, which can’t happen until investment, but… and so on.

However, there’s a case to be made that this delay in data science investment by public sector procurement agencies is one of the critical stumbling blocks also preventing public sector procurement from adopting artificial intelligence, machine learning, and other cutting-edge technology with the potential to solve a lot of the recurring public sector pain points.

Raimundo Martinez, Global Digital Solutions Manager of Procurement and Supply Chain at bp, noted in a recent interview with the MIT Technology Review that “everybody talks about AI, ML, and all these tools, but to be honest with you, I think your journey really starts a little bit earlier. I think when we go out and think about this advanced technology, which obviously, have their place, I think in the beginning, what you really need to focus on is your foundational [layer], and that is your data.” Martinez stresses the importance of building a strong data foundation that allows CPOs to take advantage of emerging technologies in their supply chains.

It’s not as though public procurement departments are short on data either. Isaac argues that, “if data is a precious resource, governments are gold mines.” Governments collect huge amounts of information all the time. The widespread adoption of digital ERP systems, eProcurement, supply chain management software and vendor performance sites is now doing a great job of mining that data.

As noted in a report by researchers from the Government Transparency Institute, a European think tank, “The digitalisation of national public procurement systems across the world has opened enormous opportunities to measure and analyse procurement data. The use of data analytics on public procurement data allows governments to strategically monitor procurement markets and trends, to improve the procurement and contracting process through data-driven policy making, and to assess the potential trade-offs of distinct procurement strategies or reforms.”

By Harry Menear

An overabundance of digital solutions and a dearth of trust in procurement data presents a unique challenge for CPOs.

The digitalisation of the procurement sector is well underway, with the global procurement software market set to grow by $11 billion over the next decade, with demand for cloud-based procurement solutions and automated and efficient procurement processes driving this revenue growth.

Procurement efficiency drive

However, a proliferation of digital tools across the procurement landscape points to the growing danger of inefficiency and lack of clarity when it comes to CPOs’ digital transformation strategies. A report by procurement software vendor Productiv found that “procurement and IT are being inundated with software access, vendor intake and renewal requests,” leading to a 32% uptick in the number of SaaS apps procurement departments are running, and a steadily growing workload for purchasing departments as they manage, on average, 700 vendors across various indirect procurement categories.

“This patchwork of tools across various steps of the vendor management lifecycle has created technology, team and data silos,” notes Aashish Chandarana, Chief Information Officer, Productiv. “Instead of increasing efficiency, these tech stacks start adding up to a lot of manual work to bring everything together.” The result is less time and less data to support generating meaningful insights to drive the necessary efficiencies that procurement needs to start producing for the business.

Frequently, it also seems, procurement spends so much time managing sprawling, disconnected tech stacks, that it doesn’t have the time to ensure its data is trustworthy either. A SpendHQ report found last year that “79% of non-procurement executives express limited confidence, or none at all, in utilising procurement’s data for making strategic decisions.” CPOs might recognise the critical nature of accurate data in driving decisions, but so far it seems as though the industry is struggling to ensure the accuracy and reliability of procurement data throughout the wider organisation.

Big Data potential

The potential of big data, effectively harnessed, is tremendous in the procurement process—potentially creating true visibility in otherwise murky or completely opaque value chains, highlighting opportunities for cost containment and efficiency, and helping flag risk factors that could preempt disruption.

Organisations looking to maximise the potential applications of data within their organisations need to be simultaneously mindful of the need for a decluttered tech stack and verifiable, trustworthy data if they are to avoid the pitfalls currently affecting the sector. 

By Harry Menear

Data is the key to unlocking new opportunities and managing risk, but capitalising on the opportunities of data in procurement is not without challenges.

Over the past few years, the procurement sector has been thrust into the limelight, as CPOs are increasingly being identified as drivers of value creation, cost containment, and risk management.

In addition to business and process innovations, a lot of the changes in the role of procurement are due to a wave of digital transformation sweeping the industry. If digital transformation is the engine driving this elevation of the procurement function, then data is the fuel powering it.

Effectively capturing, organising, and utilising data to generate meaningful insights can produce significant benefits for the procurement process. However, costly investment into data analytics, flawed adoption strategies, and oceans of bad data can turn all the potential for wins into a whole new source of risk for the business. This week, we’ve gathered our top 3 challenges CPOs face when incorporating big data into their operations.

1. Bad data

No, I don’t mean Lore from Star Trek: TNG. Bad Data is a fundamental and pervasive risk to procurement professionals looking to empower their analytics. It’s also a far more widespread problem than many executives would like to believe. Last year, a report by SpendHQ found that 75% of procurement professionals doubted the accuracy of their procurement data, leading to almost 80% of executives outside the procurement function lacking confidence when it comes to making decisions based on that data.

In order for it to make any meaningful contribution to reducing costs, mitigating risk, promoting sustainability and driving meaningful change within the business as a whole, the data used by procurement has to be accurate. Pierre Laprée, chief product officer of SpendHQ, noted in the report that “procurement teams must do more to build and maintain influence within their organisations, including removing the dependency on spreadsheets to become more efficient.”

2. Choosing the right technology

Collecting, managing, and drawing insights from your procurement data is a matter of using the right digital tools. However, choosing the right digital tools—especially with CPOs often facing pressure from stakeholders to transform their operations digitally—can be a complicated prospect with potentially severe negative consequences ranging from sub-par outcomes and wasted budgets to catastrophic data breaches.

A report by Productiv found recently that, while “procurement and IT are being inundated with software access, vendor intake and renewal requests,” the number of applications and subscription services being managed by the average business has risen by more than 30% in the past two years. Combined with growing workloads, skill shortages, and an unclear vision for handling these growing technology stacks, Productiv’s report notes that “this patchwork of tools across various steps of the vendor management lifecycle has created technology, team and data silos. Instead of increasing efficiency, these tech stacks start adding up to a lot of manual work to bring everything together.”

3. Creating spend data visibility

Dark purchasing refers to the phenomenon of procurement expenses incurred outside a business’ defined procurement process. It’s uncontrolled spending that procurement can’t see, but that still gets added to their numbers at the end of the quarter.

Big data and procurement is often thought of in terms of its ability to help understand the world outside the business’ walls—logistics, pricing, supplier behaviour throughout the market in response to market changes—but effectively deploying data analytics to understand why dark purchasing is happening, when, and by whom is a vital step in figuring out how to reduce its impact on the company.

Unfortunately, this presents a serious challenge, as many procurement departments lack a cohesive data organisational strategy; data is often scattered throughout multiple silos in the organisation, hidden from procurement in much the same way that unapproved purchasing hides until quarterly expense reports. Overcoming this challenge and creating a holistic, accurate view of company spend—both within the procurement function and outside it—is one of the greatest opportunities and challenges presented by the infusion of big data into procurement.

By Harry Menear

AI and Machine Learning-powered analytics could help security teams flag and prevent fraud in their procurement functions.

Procurement fraud is costly and hard to prevent, but with the right tools, organisations could see red flags earlier and respond in time rather than too late.

According to the Association of Certified Fraud Examiners (CFE), organisations lose 5% of their annual revenue to fraud, with the median loss per case totalling $117,000, and the average being $1.7 million.

Supply chains and procurement functions are especially vulnerable to fraud—often comprising long and winding networks, intricate webs of relationships, vast inventory assets, and multiple transactions along the S2P journey. The procurement and supply chain functions of retailers and manufacturers are especially vulnerable.

Frequently, procurement fraud is the result of a malicious individual within the organisation, although vendors and partners can also be responsible. Bid rigging, intellectual property infringement, inventory theft, and product counterfeiting are all examples of occupational fraud within the procurement process.

To address these challenges, companies must implement proactive measures. The CFE report noted that nearly half of fraud cases occurred due to a lack of internal controls, or an overriding of insufficient existing controls. It also found that anti-fraud controls were effective, resulting in lower losses and quicker fraud detection.

Fraud is prone to thrive in the procurement process, and can have devastating consequences, but the fight against the threat isn’t hopeless, and new technologies are proving especially effective in stamping out the issue.

In addition to traditional anti-fraud measures like strengthening internal controls, performing due diligence, and conducting regular quality checks, organisations can fight fraud in their procurement and supply chain functions by harnessing the power of AI and Big Data.

Fighting fraud with Big Data

AI analytics of Big Data sets can do more than improve efficiencies and predict trends in the movements of goods; these types of analytics excel at pattern recognition and, once correctly trained, can identify subtle changes in activity within the procurement function and supply chain that could point to fraud.

According to Isabelle Adam, an analyst at the Government Transparency Institute in Budapest, and Mihály Fazekas, founder of the Institute and assistant professor in the School of Public Policy at Central European University, “With the increasing use of electronic and online administrative tools — such as e-procurement platforms — making administrative records readily and extensively available in structured databases, public procurement has become a data-rich area.”

This wealth of data, if improperly handled, can become a place for fraud to hide, but if big data analytics are applied, they argue, it “can serve as a tool for auditors to identify and prevent fraud and corruption.”

By Harry Menear

Incorporating SEO techniques into your procurement strategy can empower and optimise your organisation’s source-to-pay process.

In the wake of the COVID-19 pandemic, digital transformation has emerged as a more critical strategic goal for procurement executives than ever.

Now, resilience, agility, and visibility have become vital qualities of the modern procurement function alongside the drive to lower costs and increase speed. Integrating a digital-first approach into more stages of the procurement process can, according to a Gartner study, lead to a 20% increase in revenue and a 50% reduction in process costs.

However, digital transformation needs to be considered and intentional—haphazardly adopting new tools and processes for the sake of something new and shiny will cost more than it saves, and cause more problems than are solved.

One highly effective form of digital transformation that’s often applied outside of the procurement process is search engine optimisation (SEO). Applied to the procurement function of a business, SEO techniques can help buyers reach either a wider pool of suppliers, or a more specific set of suppliers more tailored to their needs—or both, as necessity dictates.

SEO has a lot of potential to help automate routine procurement operations, allowing for procurement staff to focus on more strategic objectives and partner relationship management. Supplier discovery, as well as other elements of sourcing, can be automated with an SEO integration, and the correctly optimised online presence can be used to attract suppliers.

Four steps to SEO optimisation in procurement

  1. Know your terms. By identifying the key phrases and terms associated with your business and objectives, you can start to define an SEO strategy.
  2. Embed your terms. Take your chosen SEO terms and ensure they are a part of your brand identity across existing websites, social platforms, etc.
  3. Create content. White papers, blog posts, and media placements all increase your visibility and presence within the procurement sector.
  4. Assess, Adjust, Optimise. Constantly measure your engagement, work to understand your suppliers and partners, and iterate improvements of your strategy in response to results and the changing context of the marketplace.

By implementing an SEO strategy, procurement teams move beyond the confines of their immediate ecosystem, casting a wider net that can lead to increased competition between suppliers, lower costs, and access to new goods or resources that may have significant knock-on benefits for the business at large.

By Harry Menear

How Big Data can increase resilience, mitigate disruption, and help procurement teams spot danger before it’s too late.

In the procurement sector, successfully managing risks while achieving your other strategic objectives is what sets a successful procurement function apart from those that can expect to experience disruption. Today, however, procurement teams face greater risk than ever before as supply chains become more complex, ESG goals become more ambitious, and the parameters for compliance get narrower. 

Technology—powered by artificial intelligence and big data analytics—is radically digitalising the procurement process. While this has the potential to increase efficiency, revenue, and accelerate the procure-to-pay process, it has also driven complexity. Luckily, digital transformation also holds the key to managing this complexity. Digital tools, powered by artificial intelligence and machine learning, can tackle larger and more complex amounts of information than ever before. These analytical tools and their more powerful capabilities in turn have seen viable data sets balloon to include vast quantities of structured and unstructured data from throughout the supply chain, gathered together under the umbrella of Big Data.

Data source

Big Data, in gathering together vast amounts of information about every aspect of the source-to-pay process, in addition to broader contextual information ranging from economic instability to weather patterns, can help procurement professionals build up a more comprehensive, nuanced understanding of their procurement process than ever before. The level of visibility is unprecedented, even in a sector where supply chains are more complex than they’ve ever been.

Complex supply chains are more prone to disruption. More moving parts and longer distances to travel mean higher likelihoods of things going wrong. Michael Higgins, founder and CEO of Clutch, wrote recently that “risk is inherent at every step of the supply chain, from moving raw materials to manufacturers and between manufacturers and the distributor,” adding that “The added value of big data analytics is predicting potential disruptions, giving procurement managers time to make intelligent decisions.”

Procurement transformation

Advanced analytical tools can be used to track the weather, potential disruptions to agricultural or construction operations, political unrest like demonstrations or riots, and changing legislature that may affect everything from compliance to price. Because Big Data analytics are increasingly capable of collecting and analysing all of these factors and more, procurement professionals have the capacity to counteract sources of risk that traditionally would have seemed as inevitable as an act of divine wrath.

The risks to a supply chain are really representative of risks to your suppliers and their networks. Big Data analytics is also granting insight into the workings of—allowing a huge number of variables tied to each supplier to be tracked and used to make decisions. The result is a more agile and reactive procurement process that can analyse and respond to data analytics in real time, as opposed to trying to make best guesses based on past results and limited human judgement.

Procurement is truly transforming from the back office to the boardroom—becoming more strategic, digitally empowered, and complex than ever before—and Big Data analytics are increasingly a vital part of the function within the modern source-to-pay process.

By Harry Menear

From risk management to real-time trendspotting, Big Data is injecting unprecedented speed, agility, and visibility into the procurement process.

Every company in the 2020s is a data company — just like every organisation in the 2010s was a software company.

This presumably goes all the way back to when every company was a sharp rocks and oxen firm. For the modern enterprise, identifying how the technology du jour empowers successful organisations in your industry and harnessing it for your own ends is just as vital to success today as it was for the Egyptians in 3,500 B.C. to figure out as quickly as possible where the Sumerians were getting all those cool, new, super shiny and sharp new rocks.

Nowhere is this more true than in the procurement sector. A place where harnessing Big Data can drive new efficiencies, improve resilience and agility in the face of disruption. This is done all while helping procurement teams understand their business in real-time.

However, this doesn’t mean that Big Data analytics adoption has been simple, easy, or without risk. The disruption caused by the COVID-19 pandemic highlighted most of a company’s value chain is dependent on external third parties.  There’s only so much you can get done without engaging with organisations up or down your value stream.

Procurement teams can typically find themselves managing expenses accounting for about 50% of a business’ revenue — sometimes overseeing spend in the billions of dollars. Procurement’s ability to maintain and navigate increasingly complex networks of relationships can be hugely enhanced by the power of analytics. However, adopting the wrong analytics platform, feeding it the wrong information, and drawing the wrong conclusions can be disastrous.

By gathering data from both internal and external sources, then analysing it with the appropriate tools, procurement teams have the capacity to create powerful insights in less time than ever before.

Combining environmental information (weather patterns, crop cycles, raw materials pricings, political unrest, etc.) with rich data generated within a company’s operations, mean that procurement teams using Big Data analytics have a significant leg up when it comes to predicting trends, finding favourable prices for buying, and sourcing inventory from a diverse network of suppliers so as not to place undue stress on their partner network. Reduced costs don’t hurt matters, either.

By Harry Menear

A closer look at some of the best tools to help your procurement function capture the potential benefits of a world powered by big data.

Procurement is becoming an increasingly data-driven field. Correctly gathered, organised, and analysed, Big Data sets can help a procurement department do everything from increase efficiency and reduce costs, to make more ESG-conscious decisions or shore up their supply chain against unexpected disruption. However, managing huge amounts of structured, unstructured, internal, and external data can present a significant challenge for procurement staff. This is especially true when procurement professionals haven’t needed to also be data analysts until recently. This means there might be understandable skill gaps in your team.

Luckily, there exists a wealth of digital tools designed to capture, analyse, and generate insights from massive amounts of data. This is all specifically catered towards enhancing and elevating your procurement function. Here’s a closer look at five digital tools to help maximise the potential of Big Data in your procurement function.

1. GEP Smart

With AI-powered spend analysis, as well as strategic sourcing, purchase order processing, and invoice management, GEP Smart is one of the more broadly capable and robust procurement tools on the market. The platform is capable of absorbing, collating, and converting large data sets into everything from compliance procedures to supplier management strategies.

2. Kissflow

For smaller organisations still in the process of growing their procurement teams, Kissflow can help bridge the gap between a legacy or underdeveloped procurement function and where it needs to be with less emphasis on learning complex new digital tools. Kissflow is all about being simple, accessible, and customisable. The platform handles basic procurement functions natively, but integrates with a huge variety of other tools and programs.

3. Coupa

Focused largely on spend management, Coupa unified, streamlines, and empowers the source-to-pay process. The firm uses Big Data analytics to manage working capital and forecast budgets, giving procurement professionals more visibility over finances.

4. Tamr Procurement Analytics

Tamr Procurement Analytics specifically targets the problem of siloed data within the supply chain, helping procurement professionals quickly unify their data sets and start using artificial intelligence to generate insights at speed. The AI and machine learning decision engine underpinning Tamr’s platform enriches user data while also curating it against a rigorous set of standards to ensure quality.

5. TARGIT Decision Suite

TARGIT is a business intelligence and analytics tool that can gather observations from throughout the supply chain. This allows them to be more easily converted into actionable insights. The platform embeds directly into internal and external-facing portals, allowing a procurement team to share dashboards with the entire supply chain network. By creating a holistic impression of the entire supply chain, TARGIT improves the results of its predictive analytics, increasing efficiency and resilience.

By Harry Menear

Giorgio Sarno, Senior Data Scientist at Stratio, on how AI and ML can unlock data from both internal combustion and electric vehicles to reduce their carbon footprint and hasten the transition to zero-emission transport.

A single bus journey pollutes 82% less than the same journey by car.

For this reason, a small decision like taking public transport instead of driving is a big step towards lowering emissions. If we then consider the significant reduction in greenhouse gas emissions that transport operators can achieve by implementing eco-driving solutions or by transitioning to electric vehicles, choosing the bus over personal vehicles becomes an even more sustainable choice. Transport operators are already moving in the right direction in terms of minimising the environmental impact of their services, and they’re doing so by leveraging vehicle data.  

The bus is essentially a black box, where vehicle technical data is locked and remains largely inaccessible to transport operators. However, by automating the collection and analysis of this data, fleet managers can rely on artificial intelligence (AI) and machine learning (ML) algorithms to implement a predictive maintenance approach. This means that vehicle sensor data can be turned into actionable insights to help reduce the carbon footprint of internal combustion engine (ICE) buses, hasten the transition to zero-emission transport, and minimise breakdowns and downtime, resulting in a more reliable public transport service.

Car vs Bus

With cars representing 72% of EU road transport emissions, it’s key to make public transport the preferred form of travel. However, in order to create a push towards shared mobility and leverage the environmental benefits of public transport, operators and public transport agencies need to ensure it can live up to the promise of reliability, getting passengers where they need to be, when they need to be there. To guarantee reliability, it is necessary to turn our attention back to the most crucial component of public transport: the vehicle. 

AI predictive maintenance is like a digital stethoscope for buses, enabling operators to tune in to the state of health of their vehicles’ critical systems and components. By collecting the data from built-in vehicle sensors and analysing the patterns that indicate the condition of components, maintenance managers can leverage real-time, actionable insights to inform their decisions. AI can identify tricky faults that humans could overlook – tracing leaks in the compressed air system or the wear and tear of brake pads, for example. 

With such a system in place, bus operators can depend on real-time monitoring to assess whether their vehicles’ brake pads need to be replaced, meaning that parts can be ordered in bulk and that maintenance can be scheduled during off-peak periods to avoid service disruptions. Maintenance and repairs can be scheduled automatically and more accurately, contributing to better fleet utilisation and cost savings. More importantly, by preventing equipment failure, vehicle breakdowns can be pre-empted to reduce downtime and protect both revenue and customer experience.

Reduced resource consumption & enhanced asset lifecycle management

The data on equipment behaviour, failure modes, and degradation patterns can also inform asset management strategies, including engineering decisions related to repair, replacement, or refurbishment of components and systems. By extending the useful life of assets and maximising their performance, operators can minimise waste generation, reduce the need for new equipment production, and lower the environmental impact associated with resource extraction, manufacturing, and disposal. 

Moreover, early identification of sub-optimal operating conditions enables engineers to fine-tune equipment settings, adjust operational parameters or identify faulty components, reducing energy consumption and resource waste. By optimising resource utilisation, operators can function at higher energy efficiency, reduce carbon emissions, and enhance the overall sustainability of their operations. 

Curbing ICE emissions

Predictive maintenance solutions can also be used to inform eco-driving strategies to further reduce the carbon footprint of ICE bus road usage. By analysing driver patterns, optimal RPM and idling time, operators can implement strategies to lower fuel consumption and put in place a range of continuous improvement processes. Arriva Czech Republic has recorded a saving of 942 litres of diesel per vehicle per year using this approach. This equates to 2.6 tons of carbon dioxide emissions avoided per vehicle, per year. 

Speeding the transition to EVs

For transport operators, new EV technology poses challenges as well as opportunities. It comes with new breakdown patterns and failure modes and requires a new knowledge-set to minimise life cycle costs and optimise battery maintenance and route management. Additionally, the greater up front, maintenance and infrastructure costs of the transition mean that operators must have a detailed strategy in place to minimise the impact of the shift on their bottom line.

Just as with their ICE counterparts, by combining the granular collection of vehicle data and large-scale data processing with autonomous AI systems, public transport operators can gain valuable insights from the new EV data they have access to, creating a continuous feedback loop that constantly increases the ways in which data can be leveraged. The performance, faults, and range of EVs can be analysed and used to inform the planning of smooth, efficient, and profitable operations. 

Predictive battery analytics for example can provide an accurate, comprehensive view of the battery health evolution of an EV bus, allowing for effective route planning and charging requirements, as well as usage optimisation metrics to extend the lifespan of the vehicles. This is crucial given the high proportion of the overall cost of an electric bus that the battery represents. By leveraging State of Charge (SoC) and Depth of Discharge (DoD) data, fleet managers can understand if the operation profile can be changed to maximise battery life, reducing the total cost of ownership of electric buses. This type of analysis is fundamental for an operationally successful and profitable EV fleet deployment. 

The future of AI and ML for public transport

By onboarding next-gen AI and ML predictive maintenance technology, the future of sustainable, affordable, and highly efficient public transport is promising. The actionable insights on potential component failures, fuel consumption and operational efficiency offer full control over the health of both ICE and electric buses. This can be harnessed to enhance reliability, encourage passengers to move away from private car usage, curb emissions and wastage through inefficient driving and maintenance strategies, and pave the way for a smoother and faster transition to EV usage. 

AI is constantly learning, picking up data about different categories of vehicle and enabling fine tuning for improved operations. It is a system that will keep on growing with huge benefits and impact, contributing to the goals of sustainable and reliable public transport. With some operators already implementing predictive maintenance, the approach will become more ubiquitous in 2023 and beyond, representing the new frontier when it comes to smoother, more efficient and environmentally friendly operations. 

By Giorgio Sarno

Shaz Khan, CEO of Vroozi, discusses why AI is the great equaliser for companies to optimise procurement.

In today’s ever-evolving business landscape, companies are facing a multitude of challenges when it comes to managing and controlling their spending. From global supply chain disruptions, outdated technology solutions, labor shortages and much more, these challenges have an immense impact on a company’s financial health and overall efficiency. Additionally, procurement teams are regularly tasked with new responsibilities beyond spend management and purchasing, such as managing supplier risk, building, and implementing CSG and ESG initiatives, studying economic trends to determine price elasticity, finding new sources of supply, and cleaning up disparate and dirty data. Yet most companies simply do not have the human capital or bandwidth to execute these areas with quality and control.

When it comes to bridging the gap between the obligations that procurement teams are tasked with and efficiently executing on these tasks, AI may be the great equaliser to help solve these problems. While AI has turned into somewhat of a buzzword in today’s market, there’s no doubt that the technology has powerful capabilities to truly transform procurement in the foreseeable future. For those changes to take place, it is important for procurement professionals to continue to articulate the problems they are facing on a daily basis, as this will force the industry to evolve and adopt the proper solutions for better business outcomes.

Shaz Khan, CEO and co-founder, Vroozi

The problems: Unchecked spending, outdated tech, and lack of governance

Irresponsible spending can wreak havoc on a company’s financial well-being. With non-managed indirect and direct spend categories, companies experience up to a 40% increase in costs, consequently eroding their gross margins and increasing operating expenses. This usually stems from lack of visibility into non-payroll spend categories, combined with old and antiquated technology solutions within enterprise infrastructure that makes it difficult to extract data, analyse spending patterns, and generate meaningful reports on total addressable spend (sound familiar?). Poor data quality and the need for data cleansing can impede effective spending management, leading to faulty decision-making that hinders procurement efforts.

Unchecked spending can also foster a culture of mistrust and overall decreased morale among employees. When employees perceive that their hard work and dedication are being undermined by wasteful spending practices, workers begin to feel disengaged — which leads to reduced productivity. When spending is not carefully managed, there is a risk that critical projects or departments may not receive the resources they need to thrive. This not only causes anxiety about the organisation’s financial health, but it also can lead to concerns about resource allocation and fairness. Therefore, it creates broader mistrust in organisational leadership.

One of the biggest culprits in inefficient spending management comes from a lack of visibility into supplier contracts, which stifles a company’s ability to identify cost-saving opportunities. Hidden fees, price escalations, and unexpected cost structures can be buried in supplier contracts. A lack of visibility can result in unexpected cost overruns, impacting the organisation’s budget and profitability. Departments may also struggle to fully understand the terms and conditions within these contracts, including performance expectations, delivery schedules, and penalty clauses. This lack of clarity can increase the risk of contract breaches, quality issues, or delivery delays.

The long-term benefits of incorporating AI into procurement

With more at stake within procurement departments than ever before, AI serves as a turbocharged catalyst for procurement teams to optimise their processes. Procurement leaders are increasingly delegated additional responsibilities and AI offers an invaluable assistant that can process, predict, and deliver information and outcomes without exhausting human resources. For example, predictive and smart reordering can keep items that require ongoing restocking on a regular purchasing cycle. AI can also help identify alternative sources or suppliers for this item that may offer additional cost-savings and attractive incentives. As this technology becomes increasingly more capable, it’ll save procurement departments hours of time — freeing up employee bandwidth to then focus on optimising supplier relationships and other strategic tasks.

Earlier, we discussed how unchecked spending leads to mistrust and disengagement within an organisation. AI can help re-establish morale and an engaged staff by gamifying the procurement process. For example, a company can create a scenario where employees and teams are rewarded with soft benefits for complying to procurement policies, reducing maverick spend, improving supplier relationships, or negotiating a new deal with a strategic supplier. These soft benefit rewards can be programmed into the system to track and signal when teams are hitting these goals. Gamification, particularly when entire teams are rewarded together, can foster camaraderie and a dynamic culture built around the thrill of victory, aligning employees with the company’s procurement strategies.

Ensuring a smooth transition to AI-driven procurement processes

When beginning the transition towards an AI-infused process, it requires an honest assessment of existing processes, data quality, and technology infrastructure to identify pain points and areas where AI can provide the most value. Integration will require some level of customization to meet the specific needs of your business, such as custom algorithms, workflows, or user interfaces. This is an ongoing process. Optimisation requires the continuous gathering of feedback from users and stakeholders to identify which areas are working well and which features need improving. Be prepared to adapt as you go along. AI is a rapidly evolving field, and we are in the very early stages of realising the true potential of this technology.

As the AI revolution takes place in procurement, employees need to be introduced to new technologies to understand the strengths and more importantly the limitations. However, when thinking of the big picture, Procurement teams must be prepared to upskill their talent pool and recruit new talent to maximise AI’s potential including investing in certifications in data science, cloud platforms, supply chain management, and data analytics. To reap the benefits of automation, data-driven insights, and enhanced decision-making, leadership requires teams that have skills to use and interpret AI tools effectively — particularly when it comes to data management. AI solutions rely heavily on data and procurement teams must know how to effectively manage this data, including data cleansing, integration, and analysis to ensure that the algorithms receive high-quality input data and large language models for accurate results and the promise of real predictive analytics.

The promise of a brighter future

This is also why collaboration between departments is essential. For AI technology to be implemented effectively, it requires synchronisation and cross-functional collaboration between IT, data science, corporate procurement, finance, and other departments. Companies that cultivate these collaborative ecosystems within their departments gain a strategic edge in terms of stability and future growth.

It’s important to note that while AI is a productivity and enablement tool, it is not a replacement for human intellect, willpower, and execution. Therefore, it’s essential to seek knowledge and expertise from insights from companies, networking groups, and individuals with practical experience in AI and GenAI capabilities. Remember, it’s important that you do not let AI drive your business, but rather let your business needs drive AI adoption. Define the specific problem that you aim to solve and determine if AI is the right tool to boost these areas.

Ultimately, the incorporation of AI into procurement processes holds the promise of a brighter, more efficient future for businesses. Procurement departments face many challenges but if they address these pain points with a strategic approach that involves the adoption of modern technology solutions while upskilling their workforce, businesses can expect to soon see enhanced visibility into their spending and gain a strategic edge in a competitive market.  One thing is certain, AI will transform the procurement professional and function into a data analytics and supplier relationship mastermind.

By Shaz Khan

Vizibl has revealed the launch of a new sustainability target programme to help large organisations get supplier engagement for sustainability initiatives ready to launch within four weeks.

Vizibl has announced the launch of its Science-Based Targets Initiative (SBTi) Framework aimed at helping large organisations get supplier engagement for sustainability programmes ready to launch within four weeks.

The new configuration will allow companies to get started with their supplier raw spend data, which Vizibl first intakes.

The move will also see data cleansed, normalised and enriched, mapped and loaded onto Vizibl’s sustainability launchpad for emissions.

Organisations can also use the launchpad to quickly visualise emissions hotspots or which suppliers have committed to a SBTi.

Companies can quickly select cohorts of suppliers to add to supplier engagement programmes and start taking action after four weeks.

The new configuration will also allow all the supplier engagement action that’s been taken to decarbonise their supplier base, in one central location using the Vizibl platform, to mitigate against the rising tide of risk from upcoming and existing ESG regulations.

The process

This process follows SBTi’s supplier engagement guidance steps and leads the organisation through the process.

It will also mean automating key steps of the framework that would otherwise be administratively intensive spreadsheets.

The programme ready to launch is aligned to a UN-backed global sustainability standard for supplier engagement in the SBTi.

It supports Vizibl customer’s evidence of the collaborative actions associated with upcoming mandatory ESG regulations around scope 3 reduction.

It is also underpinned by a library of supporting content specifically to guide the organisation further to achieving science-based targets.

Once the programme is ready to launch, the Vizibl team is ready to walk the organisation through the launch process.

The team also supports the ongoing programme rollout and maintenance, continuously monitoring progress to ensure the programme meets agreed objectives.

“With mounting ESG regulatory pressure on businesses, ensuring our customers have the tools they need to quickly and accurately assess and improve sustainability performance across their supply base is key to Vizibl,” commented Richard Hogg, CEO at Vizibl.

“Ensuring that our customers can build a body of evidence that shows the efforts they’re taking, both at speed and at scale, to engage their suppliers to decarbonise their supply chains, is critical to meeting net-zero targets.”

Koray Köse, Chief Industry Officer at Everstream Analytics, speaks to us exclusively at DPW Amsterdam and discusses the importance of leading from the front in the supply chain

Everstream Analytics sets the global supply chain standard.

Through the application of AI and predictive analytics to its vast proprietary dataset, Everstream delivers the predictive insights and risk analytics businesses need for a smarter, more autonomous and sustainable supply chain. Everstream’s proven solution integrates with procurement, logistics and business continuity platforms generating the complete information, sharper analysis, and accurate predictions required to turn the supply chain into a business asset.

Koray Köse is a supply chain expert, futurist and multi-lingual thought leader, CPO, researcher, and published author. He specialises in working with CSCOs, CPOs, CIOs and other c-level executives while possessing more than 20 years of success in developing global supply chain and sourcing strategies, re-engineering and transforming business processes, and maximising financial resources. Köse is experienced in designing new business frameworks, risk and governance processes and deploying full-scale ERP and procure-to-pay systems to drive efficiencies through digital transformation. He is an expert in industries such as automotive, pharma, life sciences, IT, electronics and FMCG and has served as Chief Industry Officer at Everstream Analytics since June 2023.

Koray Köse, Chief Industry Officer, Everstream Analytics

World’s first Slave-Free Alliance

Recently, Everstream became the world’s first Slave-Free Alliance (SFA) validated modern slavery and forced labour technology provider. Everstream’s collaboration combines the firm’s multi-tier supplier discovery and AI-powered risk monitoring and analytics with SFA’s proprietary forced labour intelligence to expose unknown risks and protect global supply chains from modern slavery and exploitation.

“We’ve had issues in supply chain before, like conflict minerals for instance was a big topic,” Köse tells us. “Legislation came that was rather weak, where companies can say we can’t confirm nor deny that we have conflict minerals in our products. Modern slavery takes it to a whole different level. In essence, you may get import issues the moment that you might be suspicious, or the government import controls may say, ‘this comes from a specific region that has general exposure’. You basically have a disruption in your supply chain.

“If you forget about the business side, your business is actually promoting ethics that your own company in its statement and the way you live don’t align with and you didn’t know about it. So unknowingly you have actually incremented the issue that you are tackling on your own and within your environment. For us it was important to live up to the promise and look for an NGO that is impactful, has a mindset that is all about partnership and not blaming or shaming, it’s about changing the environment.”

Breaking down barriers

Around 50 million people worldwide are living in modern slavery. It remains a serious problem in nearly every region, with over 40% occurring in upper-middle to high-income countries. Due to the opacity and complexity of today’s global supply networks, companies are increasingly vulnerable to the risk of forced labour. According to a study cited by Slave-Free Alliance, 77% of companies expect to find modern slavery somewhere in their supply chain. Through this alliance, Everstream will actively contribute to enhancing capabilities and eradicating modern slavery and forced labour from global supply chains.

“We started that partnership to transfer our knowledge and also get insights from their end and understand what the upcoming issues were in the arenas of modern-day slavery that we should keep an eye on and how to help our clients to be informed and avoid getting exposed,” says Köse. “That’s where I started to talk with Hope for Justice and have collaborated with them during my time at Gartner as well. Then legislation is pushing the matter to the forefront of supply chain issues.

“Now, there is also financial impact and disruption and there’s the ability to do good and live up to the promise of your own vision and the way you want to conduct your business. Then I wanted to put our product to test and make sure that it lives up to the promise and if it doesn’t then we fix it. We went through a validation process and we got 90% plus accuracy in the feedback, which is important as it’s another confidence boost that we’re doing the right thing and we should continue on that path. We are the first world’s first validated modern-day slavery solution to tackle the issue – we’re very proud of that.”

The value of due diligence

In today’s fast-paced world, due diligence has become more important than ever. Companies must ensure they are generating the best value for money and that the product that they’re purchasing actually meets their needs. Köse believes companies almost have no choice in 2023.

“It’s an element that is not only preserving value, but it also creates it too,” he explains. “In the past it was more like a checkbox exercise that you conducted because everyone thought it was the right thing to do. Meanwhile, you had spillovers that you didn’t know about. It’s almost like what I don’t know, I don’t care. Since transparency requirements have been augmented significantly and the realisation of transparency as a value driver has dropped through Covid almost instantaneously in the c-level boardroom, compliance has become a value driver.

“It’s not just a checkbox exercise where you say that you are compliant. It is an affirmation of your product quality, brand and innovation that speaks to the customers and the choice they make. If you are concatenating beliefs and values to your product in that moment, you just have created a customer and that customer will be retained throughout the lifetime that you actually care about what they care about.”

Zip has been named as the most innovative fintech solution after being recognised with an award.

Procuretech firm Zip has announced its platform was chosen as the Most Innovative Fintech Solution by the 2023 Tech Ascension Awards.

The awards evaluate the top innovations in fintech, judging applicants based on technology innovation, market research and competitive differentiators.

Class-leading vendors recognised by the awards deliver technology that solves critical industry challenges and produces valuable business outcomes for customers.

Zip, which delivers an industry-leading intake solution, provides enhanced spend visibility, integrations into a company’s tech stack and new AI capabilities to accelerate workflows and identify savings.

The company’s platform modernises procurement workflows with a single front-door for employee purchases.

Setting the standard

“Our intake-to-pay solution is a revolutionary approach to procurement, and we’re thrilled to be recognised,” said Rujul Zaparde, co-founder of Zip.

“Zip not only improves efficiency across every business function but contributes to a new, highly improved employee experience by solving first for employee adoption of spend controls.

“We’re on a mission to continue setting the gold standard for procurement. Zip is the only platform that seamlessly streamlines procurement processes from intake all the way through to payments.”

The Tech Ascension Awards applicants are judged based on technology innovation, market research, hard performance stats and competitive differentiators.

The awards acknowledge leaders in enterprise and consumer technology. Two panels of enterprise and consumer industry experts judged submissions based on factual company descriptions. They were also measured on relevant statistics and data points as well as distinctiveness in the marketplace.

“As AI, cloud and interoperability serve as the new driving forces, we’re honoured to recognise these leaders in innovation,” said David Campbell, CEO, Tech Ascension Awards.

“We look forward to continuing to recognise companies that hold the power to transform the financial landscape for the better, driving advancements that improve accessibility, security and simplified experiences for users.”

HICX CEO Costas Xyloyiannis on why we should turn the spotlight toward the experience suppliers receive as they serve big manufacturing brands.

What’s clear from Deloitte’s Global Chief Procurement Officer Survey 2023 is that environmental and social governance (ESG) is now firmly on the corporate agenda. This year, it leapt right up the priority list, from seventh place to second.

Elevating ESG, however, is tough to deliver. In practice, it is hugely dependent upon good supplier data, which is notoriously hard to achieve and maintain. Exploring why turns the spotlight to its source: suppliers. So, do suppliers themselves cause brands to struggle with data? 

Supplier experience expert HICX’s CEO, Costas Xyloyiannis, says they do – but only reactively. Where we really should turn the spotlight, he believes, is toward the experience suppliers receive as they serve big manufacturing brands. 

Letting data live across teams will harm it

The way in which big brands work with suppliers creates too many entry points for their data. Each digital tool which employees use to engage suppliers is an opening. And by default, suppliers deposit their data in whichever tool they’re expected to use. 

For example, when working with a major brand, suppliers are expected to use different tools for placing orders, sending compliance surveys, assessing performance, and doing many other tasks. Furthermore, most employees across the business work with suppliers in some way. Each time the parties work together in one of these tools, it stores the supplier’s data. And when we step back and look at all the data across the brand, as a whole, it is very compromised.

When the master dataset is created this way, it gets peppered with duplicated, incomplete, and outdated entries. Regrettably, in this format, it misguides decisions – including those which shape ESG activity. 

The best team to own supplier data is overrun

Brands can reverse this weakness by addressing the data problem. But someone needs to do it. Despite so many teams contributing to and using supplier data, there is no one perfect owner for the job.

There is a function, however, which is closest. Procurement. As it already runs the relationship with suppliers, Chief Procurement Officers (CPOs) can probe adjacent issues – such as data. 

A consideration though, is that Procurement teams already have mandates, which they are stretched to deliver. Eating into the function’s bandwidth is the necessity to tackle inflation, demand surges, driver shortages, and other Covid-19-related issues. Also waiting for the function’s attention is digital transformation, an area in which it seriously lags. 

Put data at the heart of current strategies

Looking at Deloitte’s latest survey results, there is an opportunity for CPOs to work smart. There is a clear path for CPOs to fit the brand’s data goal at the heart of their two top strategies, “increasing supplier collaboration” and “investing in digital transformation.” Supporting this approach is in the interest – and arguably the responsibility – of all C-suite executives. 

How then can fellow executives get involved? First, we can help Procurement’s collaboration strategy by reforming how every employee sees suppliers. Too often, suppliers are just a means to save costs. And while saving costs is important, it’s not everything. Untypically, cost savings slipped off the podium in this year’s survey, into fourth place. This shift in focus – away from squeezing suppliers and towards collaborating with them – will bode well for brands that want to perform in ESG. But only if everyone in the organisation can adopt the mindset.

If they do, brands can offer suppliers a better experience which will encourage them to contribute to improving data. It is human nature to want to give back. Further, we learnt in a recent HICX survey that suppliers are 20% more likely to “go the extra mile” for brands they rate as customers of choice. Therefore, it’s likely that suppliers will want to participate.

But a willingness to hike data quality is not enough. In addition to company mindsets, brands must tackle a second obstacle: digital processes.

Redefine what it means to digitise

Next, we can help Procurement to revamp the tools through which everyone engages suppliers. We know that too many entry points pull down data quality. The opportunity, then, is to guide the way in which Procurement digitises so that the brand and function can gain control. Thinking about processes in this way is real digital transformation.

Today’s situation makes maintaining reliable data very hard. Any attempt to cleanse data is undermined by the inflow of new data from multiple sources. It’s like trying to clean the ocean. The rate at which new pollution enters the ocean outstrips most efforts to remove it. And in both cases, it makes sense to control the inflow. 

In a digital environment, this means fitting a solid data foundation. A data foundation, in practice, is a central repository with one front door that is monitored and through which all new data must come in. Master data can be sent to other tools. The rule however is that they can only borrow the data, and never alter it. Good data resides in this foundational repository, where it is looked after. 

A word of caution though: be aware of quick fixes. A deeper look at the “multiple entry points” situation reveals a deeper integration challenge. Established tools, such as source-to-pay suites through which Procurement and Finance work with suppliers, don’t always mix well with newer tools on the market. One remedy is to use established suites fitted with newer features. But this fails to address the data quality goal. It reminds me of the famous quote by Henry Ford: If I had asked people what they wanted, they would have said faster horses. Using old suites fitted with new features is like using a faster horse. It’s a stopgap. Rather, let’s stop good data’s tendency to evade ESG leaders when they need it most. Let’s tackle underlying issues once and for all. 

Building for the future

Truly digitising, of course, gives suppliers a better experience too, which drives the collaboration goal—and sets in motion a virtuous cycle. 

Now, suppliers who once fed the ESG data problem can contribute to its solution. Leaders who help their CPOs to collaborate with suppliers and digitally transform, for the greater enterprise, can steer supplier behaviour and keep good data. And this, as we know, is the fuel to ESG success.

By Costas Xyloyiannis, CEO, HICX

Digital procurement functions and leadership styles are changing as the pace of technology adoption accelerates.

The CPOstrategy Podcast: Unleashing the opportunity of procurement

Simon Whatson, Vice President of Efficio Consulting, speaks to us about the changing digital procurement function.

We also discuss how leadership styles are changing as the pace of technology adoption accelerates.

There is an urgent need for the digitalisation of the procurement function, according to a new report from leading smart sourcing solutions organisation Globality

There is an urgent need for the digitalisation of the procurement function, according to a new report from ProcureTech and leading smart sourcing solutions organisation Globality.

The report, which can be read in full here, states that 9/10 of global procurement leaders are committed to the urgent transformation of their operations and processes to become more resilient, agile and future-proofed in these uncertain and volatile times.

The report, which surveyed 170 global procurement leaders, claims that innovative and emerging technologies are being harnessed in order to better arm CPOs as they face global inflation, COVID-19 and geo-political crises such as the war in Ukraine.

Those surveyed also cited the growing need to fully digitalise operating processes in order to improve efficiency and boost cost reduction, while enhancing agility, resilience and value. 90% expected operational transformations within the next three years.

The report covers:

  • Digitalisation drivers
  • Future procurement operating models
  • Digital work in the future
  • Procurement process digitalisation
  • Digital supplier management
  • Challenges to progress
  • Value of digital adoption
  • Change manifesto

“Everyone recognises this shift, 99% of companies plan to make changes to their operating model over the next three years,” says the Globality report. “In 2020 and 2021, change has been thrust upon us all. In 2022 and beyond companies are owning the shift. In our research, we have seen the procurement leaders outperform their peers through a focus on resilience and cost in the short term. However, to maintain this competitive advantage in the long term, they need to adopt a new digital-led operating model.”

That said, 81% cited a lack of organisational support with regards to digitalisation, indicating a need for further engagement at some enterprises. 68% say that digitalisation will continue to increase business self-service, while 50% of organisations aim to move to a business procurement-centric organisation, acting as advisors and business partners versus executing transactional processes.

Content Credits: Globality & ProcureTech

Designed By: CPOstrategy

Procurement channel optimisation is a holistic approach to maximising the performance of, and value from, companies’ external spend and digital…

Procurement channel optimisation is a holistic approach to maximising the performance of, and value from, companies’ external spend and digital assets.

The CPO has one of the hardest jobs in the company managing spend with suppliers. She or he has to work with people who think they are expert shoppers (many of us are Amazonaholics, or equivalent) following processes alongside their day job, and who need to be convinced to buy from suppliers who may not be their personal preference.

The impact of taking the wrong process steps, using suboptimal channels or ill-suited suppliers can be consequential. To illustrate, for a $10bn spend company with $1bn indirects whose procurement team saves 8% a year on average, a compliance of 60% compared to best in class of 95% compliance equates to almost $30m lost bottom line benefits each year.

Non-compliant shoppers are also often adding supplier risk, accounts payable complexity and costs. Often the reason for people’s failure to use the correct process and vendors is that contracts are not enabled and user experiences are poor. Procurement channel optimisation touches the core areas of procurement and external spend management and ensures that all assets are interconnected with no value leakage.

Contract, buying channel and content data are loaded correctly allowing buyers to use correct suppliers and negotiated prices, while also streamlining operations, driving compliance and generating spend insights. The procurement function can then realise the full value for their business. After all, underperformance can hide in plain sight unless all channels are fully utilised and optimised.

Read the full article in CPOstrategy – Issue 30

Written by Veronika Strausova
Procurement Transformation Lead, IBM Consulting, UK & Ireland

Sustainable and ethical procurement practices increase trust and confidence.


Winston Yong, Blockchain leader at IBM Consulting, reveals how blockchain can be a great tool for organizations to move towards more sustainable and ethical procurement practices.


Confidence in your procurement promise through trust and traceability

As enterprises, and their connected ecosystems, move toward more sustainable and ethical practices, the procurement function has been placed under even greater scrutiny.

On the front line of assuring the sustainable and ethical practices of its suppliers and partners, and by proxy itself, the procurement function needs to demonstrate providence by accessing greater transparency within the supply chain to establish the provenance of the goods and services they are purchasing.

What is Blockchain technology?

At the forefront of technologies that are providing a new level of transparency and traceability is blockchain. The concept of blockchain is very simple. Every ‘event’ has a block of information associated with it as it occurs.

As other related events occur subsequently, the associated event also has another block of information connected to it. If we were to chain all of this up cryptographically, you would be able to trace the history of the event to a high level of assurance. That is the basic concept of blockchain, which is shared, secure, INSIGHTS Confidence in your procurement promise through trust and traceability immutable, and configurable; changing the way that provenance and traceability in the supply chain has been determined, with incredible granularity.

Supply chain implications

A great example of how blockchain is increasing transparency and provenance in the supply chain is seen in the seafood industry. The seafood industry faces several challenges; primary amongst them is reputational: how fish is farmed. Trust is paramount with consumers that buy seafood. They want to know what the fish has been fed, for example, and this trust requires ever more information.

The Seafood Network is a blockchain-based network for the seafood industry. By joining the network and utilising the blockchain transparent supply, seafood companies can be more open about how the food is produced so the consumer will have a greater knowledge and understanding of that product.

The natural predisposition of blockchain to independently validate and securely track the provenance of products has seen companies, quietly and assuredly, apply blockchain technology to record events along many diverse distribution chains.

CPOstrategy – Issue 29

Read the full article from Winston Yong in Issue 29 of CPOstrategy.

Featuring in the ProcureTech100 Digital Yearbook, sponsor IBM provides an insight into why data is key for ESG and procurement…

Featuring in the ProcureTech100 Digital Yearbook, sponsor IBM provides an insight into why data is key for ESG and procurement partnerships.

ESG

Sheri Hinish, IBM

Sheri Hinish, Executive Partner and Offering Leader for IBM’s Sustainable Supply Chain, Finance and Circularity, gives her verdict on how technology is facilitating change across procurement so organisations can become more sustainable, which has become a significant priority.

ESG

Sustainability is a significant priority right now, across every enterprise and its entire operations, particularly with regards to procurement – representing a massive challenge, as well as numerous opportunities, to CPOs and CSCOs alike. And technology is enabling much of this dramatic change.

Technology is a force for good, helping organisations in key areas of their supply chains, such as responsible sourcing, risk management, calibrating SDG (sustainable development goals) ambitions with ESG (environmental, social and governance) action and green operations, while building intelligent supply chains for sustainable decision orchestration.

“IBM has been a steward in sustainability for over 50 years now,” IBM’s Sheri Hinish explains. “We also possess deep research through our Institute for Business Value (IBV) that marries the convergence of tech with ethical innovation to improve the world we share as well as the human condition. IBM works closely with the IBV, our ecosystem and how we protect the organisation’s social license to operate by creating resilient communities and impact through sourcing and procurement. These concerns are front of mind for CPOs and CSCOs right now.”

Sheri Hinish, IBM

Delivering ESG through Tech IBM’s partnership with the World Business Council for Sustainable Development (WBCSD) in Scope 3 emissions leverages its blockchain solutions to track, measure and report on net-zero commitments.

“Zero carbon is an interesting focus, as we’re actually seeing net-zero being challenged, particularly in agriculture and industry consumer packaged goods,” she explains. “However, having a regenerative and climate restorative mindset, while thinking about creating shared-value and equity are, in my opinion, just as vital to our planet’s needs when you imagine this through the lens of supplier engagement, particularly with diverse suppliers and SMBs, supplier development, sharing best practices, building a longer table in educating responsible partner sourcing, creating safe and supportive work environments, and fundamentally creating social impact through community building and investment. Social values of brands show up in supplier relationships, experience, access and development.”

ESG

CPOstrategy – Issue 28

Read the full article from Sheri Hinish in Issue 28 of CPOstrategy.

The Digital Insight team decided to find out more about procurement’s relationship with data, intelligence and its maturity…

Modern procurement has undergone so much change in recent years, it is finally achieving recognition as a true strategic business enabler. Empowered by data-driven insights and digitised systems and tools, procurement occupies a unique position at the heart of an enterprise’s operations, supply chains and growth.  How are leading companies creating sustainable digital capabilities and how do companies do this at scale?

The Digital Insight team decided to take a deeper dive into this fascinating area and assembled an incredible panel of digital procurement CEOs to find out more and share procurement’s relationship with data, intelligence (and its maturity), as well as the opportunities emerging from these insights and the technology that captures them too. You can watch the full video discussion here…

The panel covered

Data in procurement

  • With more access to data in procurement than ever before, how does this differ from 5-10 years ago?
  • Where is this data coming from?
  • What does this mean for the role of procurement?

Evaluating and dealing with risk

  • Is there more risk in the supply chain now than ever before?
  • How has evaluating risk changed for better or for worse?
  • Are the risks becoming increasingly dynamic and changing?

Opportunities in procurement

  • With the capturing and understanding of data, is this now a unique opportunity for procurement, to act as an “intelligence hub” across multiple domains from risk to sustainability and cost to innovation?
  • How do we capitalise on this opportunity?
  • What role will ProcureTech vendors/players have in this?
  • How important is it for business to adopt a continuous approach with respect to the data that they gather on their vendors and how do they feed this data into their digital procurement platforms?

Joining The Digital Insight were…

Ilya Levtov (CEO Craft)

Craft serves large companies (Fortune 100, FTSE 100) and government entities with comprehensive insight and intelligence on their supply chains.

Success doesn’t happen overnight

“…the challenge and struggle that a lot of enterprises are finding themselves in is how to filter down and get to the right answers. The only thing we’ve seen reliably successful is to take a spirit of experimentation and curiosity and not to be hell bent on getting the answer or a positive ROI for the CPO next month, but to say, it’s going to take some back and forth. That’s the way we personally love to work with clients. We say: there’s a ton of stuff you know, there’s a ton of stuff we know, but we’ve got to work together and iterate with different data sets, different models, different risk models, in order to come to the right answers. It’s going to take some time, but we will make progress if you take a medium to long-term view. That’s when you’re going to get those answers and those models working… not overnight.” Ilya Levtov (CEO Craft)

Aleksandr Yampolskiy (CEO Security Scorecard)

Security Scorecard pioneered the way in which it collects all kinds of data points from all over the world and how it uses those data points to reduce them to a score representing the likelihood of a company to suffer a data breach. Security Scorecard is utilised by over 1,500 plus top enterprises all over the world to hold their suppliers and third-party vendors accountable, and to make insurance underwriting decisions.

Now is the time for procurement!

“Now is actually a great time to be in procurement. Procurement is being disrupted through the proliferation of new types of information and data that enable us to make better decisions. For the first time, it makes it possible for procurement to move from being a support function, to being a business enabler and a value creator at the forefront of the innovation. It’s a very exciting time to be in the procurement space today.” Aleksandr Yampolskiy (CEO Security Scorecard)

Cynthia Figge (CEO CSRHub)

CSRHub is a big data platform and one of the largest aggregators of structured ESG data, covering companies worldwide.

Risk in the supply chain

“…risk has gone up dramatically in the supply chain, at least from an ESG or sustainability perspective. Some of the data has been backward looking, in other words, if there is some great disruption or something bad happens, then there are news ripples and that is important. But now where I’m seeing companies shifting is they really want to know about a company’s performance across all these dimensions of environment, social and governance, so that there can be some sense of predictability and an ability to screen across actual performance issues in advance of some kind of a bad event. We’re seeing a demand for that data and that understanding of the suppliers in the value stream: are they really measuring up? Are there some risks there in terms of what we can see around performance and benchmarking?” Cynthia Figge (CEO CSRHub)

Lance Younger CEO of ProcureTech

ProcureTech are building the digital future of procurement. Solving the most pressing social, environmental and economic challenges requires new thinking and a new platform for procurement leaders, entrepreneurs and the digital procurement ecosystem.

ProcureTech is home to the ProcureTech100 – the definitive global 100 pioneering digital procurement solutions.

Together with ProcureTechSOURCE and ProcureTechEXPERTS, they will accelerate, smarter solution selection and digital procurement ecosystems that will empower procurement transformation.

The tipping point of procurement

“…We’re at a tipping point for procurement in terms of a transformation, which began at the start of this decade. Most procurement functions, if you were to assess them from a digitalisation or data perspective, will score three to four, maybe five (out of ten). You have one or two that are leading lights, but I think that procurement overall is struggling to keep up with the changes in data access and data proliferation and not because of the technology, but because of the people. We don’t have enough people with the right skills to be able to help procurement transform at the pace at which we need it to change.”

Why supplier data can make or break procurement

Supplier data is the lifeblood of procurement and leaders rely on the strategic insights they get from data analysis to make decisions that reduce risk, boost cost savings and drive performance. 

Even so, if the data is faulty, the insights will also be faulty, and a surprising 81% of companies say they are not completely confident in their supplier data. There are a variety of reasons for this:   

  • Suppliers may not always keep their data fully updated in self-service portals.
  • Information isn’t enriched with independently verified data to the level procurement teams need, to include diversity status, proof of compliance, data protection policies and more.
  • Researching, assessing and auditing suppliers can be tedious and time-consuming. This means organizations make decisions on incomplete or unreliable data or skip the process altogether.

These challenges have long plagued the procurement function. The issue has come to the forefront of procurement discussions over the past 18 months for many reasons, but most notably because organizations have had to make rapid decisions in response to the COVID-19 pandemic, have increased concerns about business integrity, and face calls from government and civil society for greater diversity and equality of opportunity. 

Supplier financial health also remains a top concern. According to riskmethods’ new report, the biggest supplier risks aren’t directly related to COVID. In fact, several key indicators of supplier financial instability increased over the last half of 2020, including ownership structure, field issues such as product safety risks and force majeure warnings. Reliable supplier data is instrumental in meeting these challenges and building supply chain resiliency, agility and diversity. 

WATCH NOW: Why reliable supplier data matters

Here are three ways reliable supplier data supercharges procurement:

Drives agility with deeper visibility.  

One of the most important lessons we’ve learned from COVID is the criticality of supplier diversification. When production slowdowns, closed borders and fluctuations in customer demand caused global supply shortages, organizations had to adapt quickly and find alternatives. Outdated or incorrect supplier data prevents procurement from confidently deciding on the fly which supplier is the next best to tap. 

Total visibility and a deep understanding of the supplier base – capabilities, current orders, past performance, financial risk indicators, whether they’re third-party risk certified, have been audited for cybersecurity vulnerabilities and more – are critical for being able to respond and bounce back from unexpected supplier events. Without this 360-degree view, how do you know if your backup supplier can deliver? What if they can deliver, but are out of compliance or close to bankruptcy, which opens you up to new risk?

Disruptions are inevitable. Reliable data puts procurement in a position to effectively navigate change, reduce risk and take advantage of new opportunities.

Boosts supplier diversity with detailed insights.

Increasing spend with diverse suppliers is the right thing to do because it contributes to social and economic value by helping traditionally underrepresented groups that typically encounter barriers to growth. Diversity is also good for business. According to a study by The Hackett Group, nearly all diverse suppliers meet or exceed buyers’ expectations. Companies that also allocate 20% or more of their spend to diverse suppliers attribute 10-15% of their annual sales to supplier diversity programs. A diverse supply base supports marginalized groups and advances innovation, opens more channels for goods and services, drives prices down and ultimately contributes to bottom line success. 

Poor data quality is often a roadblock to reaping these benefits. Organizations don’t always have clear insight into supplier diversity status and which companies are considered historically underutilized vendors — minority, women, veteran, LGBT-owned or Small Business Administration-defined small business vendors. This makes it incredibly difficult to understand the inclusivity of the supplier network and where to boost representation and spend. Reliable supplier data equips organizations to confidently identify and fill gaps and invest in the suppliers that directly support company values and initiatives, whether that’s diversity and inclusion, corporate social responsibility, sustainability or another important cause. 

Strengthens supplier relationships with one source of truth.

If data is the lifeblood of the function, supplier relationships are the heart. Strong, collaborative partnerships drive product quality, risk reduction, competitive advantage, growth and more. Cultivating that type of relationship with strategic suppliers requires intentionally managed insights. 

Reliable and centralized data helps procurement get an intimate and complete understanding of suppliers – procurement history, supply categories, financial stability, purchasing and contract records and any other signs of the supplier’s relationship to the organization. This insight enables teams to segment out business critical partners, identify any risky partnerships and move forward mutually beneficial opportunities that establish trust and unlock new value. The better you know, communicate and work with your suppliers, the more likely these partners are to help you address your own needs.

The bottom line

Not having reliable data to guide procurement decisions is like driving to an unfamiliar destination without a map or GPS. You might eventually get there, but you’ll likely have taken a wrong turn or two, and spent more time and gas money than needed, in the process. In fact, Gartner research found that poor data quality can cost businesses, anywhere between $9.7 and $14.2 million a year. 

With access to stronger and more reliable supplier data, procurement organizations can broaden their supplier network in a meaningful way that supercharges strategy, maximizes effectiveness and speeds the path to achieving critical objectives. 

Jim Bureau, CEO of JAGGAER

About the author

Jim Bureau is CEO of JAGGAER, which celebrated 25 years in business last year. Jim is responsible for the company’s overall vision to transcend customer experience by providing intuitive and intelligent spend management solutions that allow clients to transform their supply chain. 

Stephany Lapierre and Jim Bureau join us to tell you why supplier data is key…

Is access to fast and reliable supplier data more important now than ever before?

Stephany Lapierre, CEO of Tealbook and Jim Bureau, CEO of JAGGAER as sat down with Dale Benton to discuss a new partnership between the two that will provide enriched supplier data for JAGGAER customers through access to Tealbook’s Supplier Intelligence Platform.

Why not listen to Bitesize episode of this discussion below:

Access to accurate supplier data is a huge challenge for most enterprises, hindering decision-making, innovation and resilience…

This week saw the start of a new partnership, as JAGGAER and Tealbook joined forces in order to provide enriched supplier data for JAGGAER customers through access to Tealbook’s Supplier Intelligence Platform.

The collaboration enables JAGGAER’s customers to find new suppliers and access accurate and comprehensive supplier information, including diversity status, compliance, certifications and more, providing JAGGAER with a competitive advantage over other portal-based supplier information, community insights and networks that come with traditional S2Ps.

Access to accurate supplier data is a huge challenge for most enterprises, hindering decision-making, innovation and resilience. Through this unique partnership, JAGGAER customers will have access to autonomously enriched supplier data tagged with diversity status, compliance and certifications linked to suppliers’ profiles within Tealbook’s Supplier Intelligence Platform. This collaboration will also enable JAGGAER customers to automate supplier profiles, removing the dependency on suppliers to update their information. Suppliers will have their profiles self-maintained in Tealbook as a complement to the JAGGAER portal.

Profile photo of Jim Bureau

“Access to Tealbook data, which is updated continuously and autonomously through machine learning technology, will allow JAGGAER customers across multiple vertical industries to make better decisions about suppliers faster and more easily than ever,” commented Jim Bureau, CEO, JAGGAER.

“Many of our customers are currently exploring options to diversify their mix of suppliers for a number of reasons, including the need to reduce risk, especially in response to the pandemic, and the pursuit of environmental, social, and corporate governance (ESG) objectives. Partnership with Tealbook will give customers the confidence to respond quickly to changes and opportunities by moving reliable supplier data to upstream decision-making processes. More broadly, these capabilities are yet another step forward in our march toward fully autonomous procurement, relieving both buying organizations and suppliers of the onerous burden of manual data updates,” Bureau added.

Longer term, JAGGAER and Tealbook will set out a roadmap for full integration of their respective software platforms.

Tealbook’s supplier data foundation offers an innovative and easy-to-implement approach to autonomously gathering and validating supplier information from over 400 million websites and 600 data sources. The platform helps organizations avoid supply disruptions in times of crisis, support strategic objectives like increasing spend with diverse suppliers and improve the quality and savings from strategic sourcing, especially in new categories where there is less knowledge of the market.

Stephany Lapierre

“Even with millions of dollars of investments in cloud S2P solutions, 93%* of supply chain and procurement executives are experiencing negative impacts to their business on a regular basis due to misinformation and poor supplier data,” commented Stephany Lapierre, CEO of Tealbook. “This includes financial loss, delayed timelines and projects, unhappy internal and external customers, termination of supplier relationships and more. The solution is Tealbook, a trusted data foundation that can be leveraged by eProcurement solutions to ensure these investments are successful.”

“We are thrilled to partner with JAGGAER to enhance JAGGAER ONE’s Spend Management Platform with the power of AI generated supplier data and our advanced supplier network,” Lapierre added. “This collaboration will allow JAGGAER customers to enhance supplier data and gain access to their entire supplier base, reducing the need for data enrichment services and dependency on suppliers to enrich and maintain portals. This partnership will enable JAGGAER customers to better utilize the spend management platform to create real-time access to their entire supplier base while expanding their vendor data to quickly identify suppliers that meet their requirements, gaining intelligence, speed and agility.”

Digitising procurement to drive efficiency, transparency and effective supplier management…

Ivalua, a leading global spend management cloud provider, and Consus, a leading global supply chain solutions provider, today announced that Jollibee Foods Corporation (JFC) has successfully deployed Ivalua’s platform to empower its procurement digital transformation, with Consus leading implementation. The comprehensive project spanned Supplier Information, Risk, & Performance Management, eSourcing, Contract Management, Catalog management, Spend Analysis, Savings Tracking, Category Management & overall change management.

Jollibee Foods Corporation (JFC) is a chain of fast food restaurants with a worldwide store network of more than 5,000 stores. It operates the largest food service network in the Philippines with 3,316 stores in the country and 2,655 stores abroad as of December 2019. JFC leverages only best-in-class processes and technologies, with its full operational procurement system used over the years to support its rapidly growing store network in the Philippines. As it continues to grow and expand internationally, there was a need for an integrated global procurement platform for its upstream or strategic processes that would perform amid presence of risks and complexities, and would improve cross-functional collaboration between internal stakeholders, procurement, and suppliers.

JFC selected Ivalua’s platform due to its ability to support every stage of its planned transformation, including quick deployment, flexibility to meet evolving requirements, analyst-recognised best-of-breed capabilities and complete, unified suite. Consus was selected as implementation partner for its deep source-to-pay expertise. Additionally, JFC was looking for a trusted partner aligned with their “customer experience first” vision to jointly disrupt current processes and adopt best practices globally.

The deployment of Ivalua’s platform has been tightly integrated with JFC’s backend SAP ERP systems to ensure seamless flow of information and maximum automation. The platform will deliver a range of benefits to JFC, including improved governance and auditability, more efficient procurement processes, more informed analysis and decision-making, proactive risk management, improved supplier qualification and collaboration and better compliance with contracts and policies.

“This represents a significant milestone in our procurement transformation, which will allow us to deliver more value to the organisation, employees, customers and suppliers,” explains Susan Tanmantiong, Chief Procurement Officer of JFC. “This project was successfully implemented by Consus and Ivalua through the commitment and support of their executive leadership.  Ivalua’s platform empowers us with the leading technology needed to deliver on our vision.”

“My heartiest congratulations to JFC and the entire Project Ruby Team,” explains Shantanu Bhowmick, Chairman & CEO at Consus Global. “I believe that the combined team of Ivalua, Consus and JFC have delivered a long-term and sustainable solution to digitise the enterprise wide Source-to-Receipt Process at JFC. With procurement transformations of this nature and magnitude, there are both short term and long-term benefits. The integrated Ivalua solution deployed will not only bring increased spend under management on one platform but also allow Jollibee to collaborate both internally and externally to create sustainable value, improve supplier performance and manage supply chain risks.”

“This project is a great example of how ambitious transformations can be successfully launched in record time when innovative procurement teams work with the right partner and leading technology,” explains Dan Amzallag, CEO at Ivalua Inc. “Consus has been a long-term partner of Ivalua, whose experience translates to significant value for our customers. And the JFC team’s customer-centric approach, vision and energy was key to the rapid deployment.”

A lack of digital maturity and a focus on supplier cost and quality are also limiting green practices…

Research from Ivalua, a leading provider of spend management cloud solutions, has shown that six-in-ten (60%) UK businesses have decreased their investment in sustainability initiatives due to the COVID-19 pandemic. According to the study, almost all (95%) UK businesses have plans in place to address environmental concerns in the supply chain over the next 12 months; however, given the impact of COVID-19 on business operations and budgets, many of these could be impacted.

The research, conducted by Vanson Bourne on behalf of Ivalua, surveyed 200 UK-based procurement, supply chain and finance professionals about managing sustainability initiatives and environmental concerns in the supply chain. The results show businesses face several hurdles when implementing sustainability initiatives, with 93% claiming it is challenging to gain visibility into suppliers to track the environmental impact of their supply chain. When it comes to working with suppliers, quality (38%) and cost (31%) are the most important factors businesses consider, with sustainability far behind (15%). Despite few placing sustainability as a top priority when working with suppliers, 87% of UK businesses believe making their supply chain greener can be a key competitive advantage.

“COVID-19 has forced many companies to change their priorities to focus on ‘business as usual’ and ensuring their survival, creating further barriers when it comes to implementing sustainability initiatives,” explains Alex Saric, smart procurement expert at Ivalua. “However, in the coming months and years, businesses must return their focus to improving sustainability and contributing to global efforts to reduce our impact on the environment. Whilst it is a barrier today, COVID-19 is also pushing leaders to rethink their approach to supply chains. In this respect, COVID-19 could be a tipping point for a sustainability revolution, and businesses that don’t take action to tackle environmental concerns could risk losing market share to greener competitors.”

Lack of visibility slowing plans to tackle environmental concerns

The report found that a lack of digital maturity is an issue when gaining visibility into the supply chain, with three-in-ten (30%) UK businesses reporting a lack of visibility into supplier risk. A further 28% said they had a lack of visibility into tier 2/3 suppliers, while 20% struggle to gain visibility into tier 1 suppliers. Businesses also face challenges identifying and mitigating against environmental concerns in the supply chain, where the biggest barriers are poor data quality (39%), prioritisation of cost (38%) and difficulty collaborating with suppliers (38%).

As a result of this lack of visibility, most UK businesses are unprepared to address environmental concerns, with 81% claiming they do not have comprehensive and fully developed plans to overcome air pollution, and almost three-quarters (74%) claiming the same for carbon emissions. Less than a quarter of UK businesses (24%) had no plans at all to address water pollution.

“Businesses need to address supplier visibility issues and make sure they are putting the right tools in place to drive environmental change internally and beyond, empowering suppliers to do the same”, concluded Saric. “This means taking a smarter approach to procurement that gives UK businesses a 360-degree view of their suppliers, including information on sustainability practices. This will make sure businesses can see exactly who their suppliers work with, assess environmental impact and identify opportunities to collaborate on sustainability projects in real time, ensuring sustainability remains a top priority in a post-COVID-19 world.”

Why not listen to our EXCLUSIVE discussion with Alex Saric on The Digital Insight podcast:

Trying to keep pace with new technologies is one of the biggest challenges that most businesses are currently facing. Trends…

Trying to keep pace with new technologies is one of the biggest challenges that most businesses are currently facing. Trends in digital transformation such as AI, the Internet of Things (IoT), 5G networks and the proliferation of chatbots are impacting businesses of all shapes and sizes. Even procurement, a department traditionally found knee deep in paper-based spread sheets and contracts is embracing these innovations and are using them to automate manual, laborious processes improve supplier relationships and improve transparency over organisational wide spend.  

So, as procurement takes advantage of the digital era, what’s likely to come next for the business function focused on delivering value and saving their organisations money? Will procurement finally get the business recognition it deserves? Here are my predictions on what’s to come for procurement:

  1. Quality data

Businesses are already making key decisions based on data analytics; however, data quality remains an ongoing challenge. In the future expect to see machine learning automatically cleanse data, ensuring that any errors or anomalies are corrected. For example, it will monitor and maintain supplier master data from contracts and the data used in pay runs.

  • Procurement to drive competitive business advantage

Thanks to new technologies providing greater business insights, procurement will have more influence than ever before on overall business strategy, growth and competitive advantage. Procurement teams will be required to move their focus from spend and cost control and focus more heavily on facilitating innovation, business agility and continuity of supply.

  • A move towards more agile procurement

Are we likely to see more departmental purchasing and procurement become a more centralised business function? I think so, and as a result we are likely to see better collaboration take place across the entire business. We could even see category managers become procurement specialists in their business units and build a network of gig workers to help satisfy their operational needs.

  • IoT, data and stock tracking

More and more businesses are likely to take advantage of IoT to enable ‘touchless’ procurement where stock levels can be monitored automatically. It can help businesses track items in their supply chain in real time and enable asset-intensive industries to link data across the business to their suppliers. Businesses will benefit from an enhanced data platform as it informs decision-making around spend and purchasing patterns, catalogue content, supplier portfolios and contract fulfilment.

  • RPA to go mainstream

Taking full advantage of Robotic Process Automation (RPA) procurement will be able to completely eradicate many of its day-to-day manual, high volume repetitive tasks. The procurement team can also say goodbye to hours spent compiling manual reports and instead use their valuable time more effectively and deliver real value to the business.

  • Improved insights into the potential for supplier risk

Procurement teams will have better insights than ever before into their suppliers thanks to a clearer understanding of data. Internal data compiled by procurement, supplier information, market and analyst data on supplier performance will be aggregated and analysed to deliver a true 360° view of supplier performance.

  • Procurement best practice to include Blockchain

We’ve seen Blockchain, the technology behind digital currencies starting to find its way into the procurement space over the past few years. I think in the future we’ll see it used selectively by procurement teams as it is expensive to develop and deploy. However, I think increasingly we’ll see it used in scenarios where there’s a need to track and trace to stop counterfeiting or a need for operational integrity.

John Cushing, CEO and Founder of Qynn, explores how AI and data analytics can help companies combat the increasing challenge…

John Cushing, CEO and Founder of Qynn, explores how AI and data analytics can help companies combat the increasing challenge of procurement fraud

Protecting business and supporting growth through finding the best market rates and products has always been procurement’s main objectives. However, achieving this is a lot more difficult than it may seem. Scouring the market, conducting due diligence and compiling historic data on other companies can be very resource intensive and time consuming, particularly for small businesses. With so much to keep track of, inconsistencies or unscrupulous activity can easily go undetected during the Know Your Supplier process, which can unfortunately see companies sleepwalk into doing business with a malicious organisation or individual.

A report released by Crowe LLP, in partnership with Experian and the University of Portsmouth, revealed the annual cost of private sector procurement fraud is estimated to be £121.4 billion each year. Meanwhile, PwC estimates that nearly 30 percent of organisations have been victims of procurement fraud in the last year, highlighting the scale of the problem. 

Yet, risks exist even within a company’s own supply chain. Typically, companies have large supply chains that span multiple suppliers and contractors across the world. As such, it is very difficult for a procurement officer to get a clear view of exactly what is going on at every part of the chain. Amidst this lack of clarity and communication, a supplier could easily sell the same equipment at a higher price to one department than it sold to another. This amounts to fraud and if not stopped could cause businesses to lose thousands of pounds.

Procurement leaders need to build a complete picture out of this complex and ever-changing puzzle. Sound decision making requires insight and clarity, which is becoming easier through data analytics and artificial intelligence.  

How can analytics help?

Carrying out checks on existing and prospective business partners has never been more important. This is where artificial intelligence (AI) data analytics can provide a lifeline and an all-seeing eye into business networks. AI can harvest company information from various sources, and analyse in real-time any changes in shareholder structure, country of operations or incorporation; which can help raise red flags in a timely fashion and so reduce the opportunity for fraud. Importantly, this can be done in an instant, reducing the time and resource required by orders of magnitude compared to manual due diligence methods.

All this enables procurement teams to paint a clearer picture of where a potential supplier sits within a group structure. This can be particularly helpful when understanding whether your contract should be held further up the group structure or with the supplier itself. It can also help understand the backgrounds of individuals within the company, which is an incredibly important part of due diligence. Finding out their employment history, who they were associated with and who they have done business with can shed light on any suspicious activity and alert procurement teams well in advance. 

Further, analysing both structured and unstructured data from within the company as well as externally could also help to reduce in-house fraudulent collusion; whether as part of bid rigging, bribery, phantom vendors or split purchases. 

Having all the right data is just one half of the battle though – ensuring the right people are on board to draw out insights and act on them to combat fraud is essential. Procurement professionals still need to decide whether there are any systematic problems that have been highlighted by the data that need addressing. Does the organisational structure lend itself to fraudulent cases? Are there any changes that could be made to counteract these issues? Analytics by itself cannot answer these questions nor implement the solutions – but it can point experts in the right direction to implement positive change.

We have seen AI and data analytics disrupt industries across the world, and it is set to help procurement professionals as well. Thanks to the automated ability to identify anomalies within the entire procurement supply chain, detecting fraud will be simpler and easier for all. 

From fragmented thinking, to out of date infrastructures and poor processes, there is a long list of reasons why supply…

From fragmented thinking, to out of date infrastructures and poor processes, there is a long list of reasons why supply chains can become unsustainable. But, according to a luxury packaging provider, digitalised data is set to transform the industry in a big way.

With over 30 years’ experience in the supply chain and distribution industry, Stuart Gannon, commercial director of Delta Global, a packaging distributor in the luxury retail sector, was keen to point out the impact these digital changes might have on the industry.

“The more mindful the consumer the more analytical we have to be in our approach to truly tackling environmental and ecological issues,” he said.

“Data gives us the ability to quickly spot and react to shifts in buying behaviours and stay ahead of the game when it comes to the sourcing of raw and sustainable materials, right through to tracking and improving the last mile journey of the goods.”

Stuart went on to highlight the main benefits digitization will have on the industry as well as new challenges it will pose.

What are the benefits of data driven supply chains?

Data can enhance the delivery and distribution of goods, ensuring faster, more economic and more sustainable delivery, as well as reduce time consuming inventory taking.

“When you are data enabled, you will increase value throughout your entire supply chain. The production line becomes more customer focused and data helps us to address what’s happened in the past and flag up risks for the future.

“Better forecasting and stock control will inevitably help us reduce waste, improve traceability of goods in the manufacturing and delivery process and release any tied up working capital.

“Data can also optimise and maximise valuable assets such as waste throughout the supply chain, churning left-over materials into product such as paper handles and other accessories.”

What are the challenges?

While these revolutionary advances have clearly had a positive effect on supply chains, not everything will be quite so plain sailing.

There are fears that the automation of data could introduce new risks with no human input into the elements of the supply chain.

“Old-fashioned tracking systems and global supply chains can mean many businesses are failing to harness data in the right way.

“There are many elements to a supply chain, but without building strong and communicative relationships amongst all partners involved, brands will be restricted by their capabilities which will influence the service and product delivered to the end customer.

“Brands need to be aware of the risks false claims can have, while it is true that your end-product may be completely eco-friendly in its materials, if it was not made, sourced or delivered in an eco-friendly or socially acceptable way your risk any reputation your product once upheld.

“There are also challenges in which the flow of information can affect accuracy and speed. When dealing with global supply chains we must be alert of time-zones and how this can affect real-time data feeds if there are delays due to working hours overseas.

“We advise investing time in getting information displayed and shared in the right way which speaks to people across borders. It guarantees alignment in all functions end goal and what we are required to do in order to advance. Data should act as the fuel for bringing supply chain partners together.”

It can be hard to keep up with all of the latest developments in the world of digitalization. Particularly when buzzwords such as AI, blockchain and real-time data are dominating the technological sector.

So, what do these words really mean?

“Artificial Intelligence (AI) learns what the data means and assists how it’s used. Machine learning enables more data to be processed in one go, enabling efficiency and speed.

Blockchain is the way to secure and transfer data, whilst real-time data is the ‘now’ and is much quicker to react to.

“Heralded as the next big thing is Robotic Process Automation (RPA), this could dramatically change the way supply chains work, introducing software which can communicate with other digital systems to capture and interpret data in order to process, manipulate and trigger a reaction.

“Then there is ‘big data’. This describes a large volume of data that is used to reveal patterns and trends depicted from human behaviour and interactions.

“An example of where this is being used is in the retail industry. Here data is giving brands a greater understanding of consumer shopping habits and will make several improvements to their infrastructure and processes.

“Digitalising the supply chain is a key area where retailers can ensure they continue to attract both new and existing customers.”

How important are relationships within the supply chain?

“Strong relationships and constant communication is paramount to ensuring all partners are invested in the same end goal.

“Businesses should take a holistic approach when managing costs, improving the quality of goods and tackling the volumes of secondary packaging waste that is generated.

“We look at ourselves as consultants as well as partners, analysing the methods, materials and designs suggested by the client and then advising on how we can better the sustainability aspect.

“Whilst some brands can source a beautifully packaged product made entirely out of sustainable materials, often corners are cut during production. This includes shipping around the world during different stages of the process.

“This results in a completely unsustainable end-product with heightened carbon emissions and more waste at multiple facilities – each costing you a pretty penny.

“Data can be difficult to read and huge volumes of transactional data in the wrong format is near useless.

“The information is only as good as the data entry and only as good as the people who are looking at that data. Therefore, good communication is vital and human intervention is still required to prioritise actions off the back of what the data is telling us.”

How else do you use data?

“We interpret our data visually, not just in terms of supply chain development, but also with the brands we create packaging for. We conduct in-depth research of the marketplace, studying the audiences we are attempting to reach, building an idea of personal profiles that analyses the end-consumer – their values and what defines good service and returnability for them.

“This integration between supplier and end-consumer influences the design process and deliverability of each project and is a much more people-led approach, making our clients stand-out amongst their competition.

“Data helps manufacturers to stay ahead when it comes to tracking where a product is in production stages and stay on target to make delivery or even beat it where possible. 

“While a business must onboard costs, in the long-run these will be reduced with less waste to get rid of and more profit from newly committed customers due to smoother services and selling or utilizing waste back into the supply chain.

“By introducing data-driven supply chains, we not only focus on the sale for today, but the sale for tomorrow.”