03 February 2023
Big data is one of the most commonly discussed topics today, and many companies are attentively monitoring the evolution of this trend. Several studies have shown that managers can make the best decisions when armed with data and tools to gather insight. Researchers report that a 15–20% increase in ROI can be achieved by introducing big data to enterprises’ business analytics.
Traditionally, purchasing and supply management (PSM) has strongly relied on data management, as procurement managers need to dispose of, clean, and update data of different natures to compare suppliers’ performance, and 20% to 50% of working time in procurement is related to searching for information Accordingly.
Big data analytics have obvious applications and represents a new era in the PSM field as they link and aggregate all relevant information, thereby facilitating and speeding up strategic and operational procurement activities significantly, and are a critical source of meaningful information that can help supply chain stakeholders to gain improved insights and gain a competitive advantage and maximizing speed and visibility, improving supply chain relationships, and enhancing supply chain agility.
However, despite the relevance of data management, the PSM field has been relatively slow to identify the potential role of new technologies and businesses have been less quick to implement big data analytics in PSM than in other areas, such as marketing or manufacturing.
Big data analytics can play an instrumental role in improving suppliers management. It resolves several pain points at strategic, operational, and tactical levels. Big data is making an impact on all supply chain activities. It ranges from improving delivery times to identifying ways to reduce the communication gap between manufacturers and suppliers.
A recent survey revealed a staggering number of critical issues that organizations are dealing with as a result of poor supplier data. Probably the most shocking result was that 93% of procurement and supply chain leaders had experienced adverse effects of misinformation about their suppliers, and nearly half (47%) experienced such negative effects on a regular basis. consequences include wasted time (63%), delays in projects (47%), and worse, terminated supplier relationships.
1. Fact-based decision-making - With Big Data, fact-based decision-making has a chance to become a ubiquitous reality. We all know that critical business issues are often discussed anecdotally. With a Big Data approach, procurement executives could consistently ask for data-oriented evidence for all major decisions and reported business issues, such as quality problems.
2. Supplier knowledge - In the past, organizations faced laborious processes that took several weeks to gather internal and structural data from the operations and transactions of the company and its partners. But today, at a significant speed, in real-time, in many cases, all of the diverse structural, nonstructural, internal, and external data generated from automated processes are made available to these organizations. Basing supplier selection, monitoring, and control on more data and information will improve procurement performance at the supplier level. As mentioned above, the main benefit is cost reduction.
3. Suppliers’ performance - The adoption of big data in the procurement process improves suppliers’ performance mainly in terms of cost but also potentially in terms of time, quality, innovation, flexibility, and sustainability
4. Increase Savings by Learning More About Suppliers - Ideally, you would constantly monitor each supplier to verify that their operational performance is up to par, their bottom line is stable and healthy, their product is of consistent quality, and their sourcing meets compliance standards. Ongoing supplier analysis can capture every detail, flag every anomaly, and verify every transaction to show you whether your suppliers are performing as expected. This will help you determine how much you stand to save or risk by switching to another supplier or ordering from a different region of the world.
5. Predictive Analysis - One of the biggest advantages of embracing big data analytics within your organization is that it creates the ability to become predictive rather than reactive so activities from strategizing for supply, the selection of suppliers, the management of supplier relationships, and ordering and expedition – has been claimed to have huge potential in benefiting from big data (BD). A recent Hackett report found that world-class organizations that take advantage of procurement technology are more efficient, with 22% lower labor costs and 29% fewer full-time equivalents (FTEs) than typical organizations.