Looking at where an organisation is going is far more important than looking at where it has come from. Most spend analytics solutions analyse historical spend without asking the right questions about the data being collected, what tangible benefits the data could bring to an organisation and how the data can be enriched. Looking forward, we should be asking what are the spend forecasts, risks and compliance challenges we will be facing.
Whilst spend analysis provides one set of insights, it is limited. We need to add to these insights, to provide increased information relating to future spending requirements. Data analytics for the modern procurement professional needs to provide support to the strategy, inform the user of upcoming challenges and the steps needed to meet projected profitability.
Looking at the relationships between demand, budgets, forecast sales and profitability is therefore becoming far more important for high-performing procurement teams. The integration of these operational workflows into the spend environment is therefore extremely important. However, there can be several leading indicators of demand: the internal organisation’s budget, availability of funds for corporate activity, other working capital requirements and external macroeconomic indicators. Most of which are not typically included in an organisation’s ERP platform.
Through the use of Rosslyn’s RAPid platform, organisations can introduce data into a predictive analytics workflow. Through the introduction of multiple data sets and regression models, a predictive forecasting tool may be developed which allows future strategies and forecasts to be created and managed for different categories of products and use cases.
This type of predictive analytics is flexible, and can also be used to adjust growth estimates, compliance and supplier performance. Used effectively, it can ultimately control the organisational spend in line with performance.
Once the spend requirement has been identified, it is important that the workflow management systems are capable of supplier risk monitoring on major projects. This can be introduced by predicting incidents that could potentially arise and gaining an understanding of what issues are on the horizon, going beyond just examining the current known risks.
Simply monitoring current workflow systems isn’t enough; near-time systems will be needed to collect feedback from those that are closest to the issues. Traditionally we might call it ‘walking the factory floor’, but essentially, it’s crucial to capture the insights from conversations happening internally. This insight is extremely valuable as the supply chain team need to be able to react instantly to demand-driven requirements. Constant monitoring and management is needed to capture insights from touchpoints such as social media, email, contracts, qualitative surveys, and other non-traditional data to enable predictive insight, and build a shared source of reality for factory and/or supply chain risk.
Organisations will benefit from the proactive monitoring and reporting of mandatory regulations and other corporate risks that provide a quantitative and visual representation of the supply chain risks that exist in the economy, as well as the financial impacts associated with these issues. Of course, this needs to be predictive, with reporting being simple to understand and carried out regularly.
New risk mitigation insights are needed that go beyond simply avoiding politically sensitive production locations, exposed individuals, sanctions and financially unstable suppliers. With intelligent risk mitigation, it’s possible for businesses to drive better informed business decisions and improve community impacts all while establishing a sustainable supply chain. Having achieved all of this, we then need to ensure that contract management capabilities are fully integrated, and that discounts, rebates, pricing etc. (all of which are included in a contract) are embedded into the monitoring and measurement systems. Contract compliance may well become the best source of sustainable cost reduction in the years to come.
Rosslyn’s systems and methods of gathering data and information have always been excellent for businesses who wanted to visualise their category management and report on the past. It is simple for RAPid users to understand how much has been spent in a category, with what cost centres, plants, countries are spending, the volume of invoices and purchase orders etc., slicing and dicing the data as they see fit.
With the new enhancements we are making to the platform, customers can now compare their data to their contracts, understand how suppliers are performing against pre-set targets, compare business goals and budgets, provide detailed price performance variance analysis on what has been bought, and derive the insights necessary to support the strategy and sufficient demand knowledge to negotiate global tenders. This level of information allows Rosslyn customers to ensure that once a supplier is contracted, the value delivered to the business is continuously managed, monitored and improved.