7 Benefits of Leveraging Data Analytics in Strategic Sourcing Decision Making
In the fast-paced and ever-changing business landscape, strategic sourcing is at the center of any organization that is looking to optimize their procurement processes.
As more and more new technologies have been emerging throughout the years, and with a performance-driven culture being the common denominator of organizations spread throughout the world, it’s only that natural that businesses have incorporated data analytics to take informed strategic-sourcing decisions.
In this blog entry we will explore which are the 7 key benefits that come with leveraging data analytics to support strategic sourcing decision making.
1 – Real-time Insights Provide Enhanced Decision Making
The first benefit of incorporating data analytics into strategic sourcing decision making is the ability to instantly access real-time insights. With data analytics at the core, organizations can gather and analyze real-time data from several data points, which in turn provides an in-depth and up-to date 360 view of the market where they act, the performance of their suppliers, and even spot industry trends.
All of which is simply impossible for organizations that still depend on traditional sourcing practices, and in turn often relies on historical data and simple intuition.
2 – Cost Reduction and Efficiency Boost is a Given
As you might already know one of the main goals of strategic sourcing is cost management, and this is where data analytics come in to play as powerful tool for identifying cost-saving opportunities that otherwise were almost impossible to spot.
By analyzing data on supplier pricing, negotiation history, and current market trends, organizations anywhere in the world can negotiate more favorable deals, identify cost-effective alternatives, and optimize their resource allocation.
3 – Mitigates Risk and Ensures Compliance
Understanding and mitigating risks is key for organizations that not only want to survive but also want to thrive in the current ever-changing global business environment.
Data analytics enable organizations to assess and anticipate any risks associated with suppliers, quickly identify volatile market conditions, bring into the decision-making table factors like geopolitical changes, and regulatory changes.
Identifying and mitigating risks in advance, allows organizations to proactively manage their supply chain, ensuring continuity and minimizing any potential disruptions. And let’s also take into consideration that data analytics also facilitates compliance monitoring, supporting organizations in the process of adhering to new regulatory requirements, and keep up to speed with new industry standards.
4 - Tailored Sourcing Strategies
No organization is alike, and a one size fits them all approach to strategic sourcing is simply not effective.
Data analytics enable organizations to fully customize their sourcing strategies and adapt them to their real needs, adjust them to their specific goals, and quickly adapt to the ever-changing market conditions.
Data analytics allow organizations to tailor their sourcing strategies to fully optimize their costs, improve quality, and stay ahead of the competition by boosting innovation.
5 – Supplier Relationship Management is Optimized to the Fullest
Another pivotal role of data analytics is the optimization of supplier relationship management. In the case of Scanmarket by applying the Spend Analytics module and also the SRPM module you will be able to:
- Instantly analyze all their historical supplier performance data.
- Easily identify who are their highest performing suppliers.
- Assess any risks associated with dealing with a new supplier.
- Build long last and collaborative relationships with their suppliers.
6 – Continuous Improvement and Optimization becomes a Daily Reality
Data analytics is not a single shot solution but rather a continuous process that allows organizations to improve their strategic sourcing practices constantly and iteratively.
Collecting and analyzing data becomes a daily reality, that allows organizations to identify which are the key areas that need to be improved, closely monitor what are the impact of those said “improvements”, and finally constantly augment their sourcing strategies accordingly.
7 –Negotiations are Planned to the Smallest Detail
For any strategic sourcing efforts to become successful, negotiations need to be done with as much information as possible.
As we already addressed in the lines above, organizations can use analytics to understand supplier pricing structures, benchmark costs and identify any negotiation levers. However, analytics can do much more specially when combined with a Contract Management software, it will allow you to:
- Monitor key contract metrics.
- Automate compliance checks.
- Provide real-time alerts to contract renewal dates.
In Conclusion
The integration of data analytics into strategic sourcing decision making is a transformative force that empowers organizations to navigate with certainty through the many nuances and complexities of the current business landscape.
Organizations are recognizing with every passing year the true value of data-driven decision-making, with resource to real data rather than assumptions or simple intuition.
In the years to come the organizations that fully embrace data analytics in their strategic sourcing will undoubtedly gain the much needed competitive advantage, drive their efficiency to the fullest, innovate before their competitors even think about it, and secure long-term success in the current highly completive global marketplace.
