4 Ways Procurement Should Be Using Big Data
While it might be a difficult term to define, there are a number of practical applications for using Big Data.
In our previous article, we looked at defining (or rather, not defining) the term ‘Big Data’. Now we are going to explore the potential big data analytics and computing may hold for the procurement function.
There are a number of high-profile ways in which organisations are using Big Data. For example, hospitals and public health organisations are using Google’s search trends and history to predict future outbreaks of the flu and colds. You can read the details here and see the counter argument here.
The application of Big Data in the procurement space is a little less apparent, or at least, less well publicised. With that in mind, we’ve put together four ways that procurement could be using Big Data to its advantage.
1. Understanding supplier risk
By leveraging the vast amounts of unstructured data now available to organisations, procurement teams can get a far better understanding of their key suppliers.
Previously supplier information could be found through the media, suppliers’ websites and personal relationships with the people being bought from. Data mining allows procurement to go much deeper than this and provides an unbiased, opinionated view of their suppliers’ standings.
2. Uncovering new savings
In the same way that harnessing data allows us to understand more about our current suppliers, correctly utilised, it can also help procurement understand more about its supply markets and where it sits within them.
By understanding the global supply market at a more granular level, a whole new set of opportunities to uncover savings is opened up. These savings can come about either through direct pricing improvements or through new innovative solutions.
3. Predicting negative external factors
In the past, Big Data has been used to predict unforeseen weather events with varying degrees of success. However, many organisations and governments are investing heavily in this technology.
These insights and predictions would, understandably, garner strong commercial interest, particularly from procurement teams looking to understand just how exposed their supply chains are to both natural, and man-made, disasters.
4. Opening up collaborative supplier projects
Understanding and using Big Data means understanding a category more clearly. Organisations that are able to get this level of understanding are in a position to open up conversations around innovative solutions.
The critical part of this is that transparent relationships with suppliers must exist first. The companies can then work together to solve problems and benefit from opportunities, even if some of these opportunities are not even visible yet.
In our next article, we’ll be be looking for some real life procurement examples where Big Data has been leveraged successfully. If you know of any great examples, please get in touch.
Big Data will be one of the themes discussed at the Big Ideas Summit on April 21 in London. Tell us your Big Data story and pose questions for our experts on this subject by registering today.
