Procurement: From Cost Killer to Influential Business Partner
How predictive analytics leverages data intelligence to drive decision efficiency.
More than ever, the role of procurement is gaining influence across organizations. According to the recent Deloitte Global Chief Procurement Officer Survey 2018, cost reduction remains the top priority for procurement. But as innovative technology and digitization play a greater part in the procurement process, the function has become much more strategic. The role of cost-killer is rapidly giving way to critical business partner.
Procurement is on the front lines in the Digital Revolution.
Procurement’s objectives and performance criteria are increasingly aligned with the overall goals of the organization. Beyond financial performance, there’s also a growing focus on the development of new markets and new products, as well as supplier risk management. Delivering value to the entire company is now a crucial part of the function.
Faced with this trend, tools are evolving and procurement is in a digital transformation — more proof that the function adapts and improves. Digitization is inevitable, breaking down silos and replacing them with true integration. Organizations that resist are finding themselves at a growing disadvantage. Facilitated collaboration and total visibility are the key words of this fundamental shift, which transforms more than just procurement, but also organization as a whole.
According to Deloitte, digitization enables procurement to:
- Automate and optimize processes, from request to billing, receipt and dispute management
- Leverage a sourcing process that benefits from artificial intelligence to manage purchases in real time, anticipate future needs and select the best suppliers independently
- Achieve full visibility of costs and processes
- Benefit from proactive supplier management and third-party risk management
- Use augmented reality (AR) to “visit” vendors
- Perform automatic audits of supplier databases
Business partner, yes, but with which tools?
Lack of visibility, cumbersome processes, efficiency failure, cost savings — these are all challenges that are solved for on the Corcentric Platform. During a webinar with Forrester, Corcentric’s Chief Product Officer Julien Nadaud tackled the role of predictive analytics in procurement. This developing technology, which is based on data collection, provides medium- and short-term trends on item prices. If you consider the purchasing process as a whole, this innovation will optimize expenses by placing orders with the right suppliers at the optimum time.
Predictive analytics = value creation.
Consider the following use case as an example of the potential value provided by predictive analysis. Take the example of an automotive center that wants to buy tires. As a buyer, you select your item in the relevant catalog:
A purchase request is generated, which can then be optimized thanks to the “Optimization” feature simply by clicking on the button:
The price history of different tire suppliers appears on an intuitive and customizable graph. Based on the data collected, predictive analysis gives you the short- and medium-term price trends for the desired item. This enables you to optimize your cart by selecting the supplier who best meets your needs. Once this step is completed, you resume the traditional purchasing process all the way to invoicing.
With this level of optimization, the realized savings with Corcentric’s predictive analytics are visible directly on the purchase request.
If you’d like to see how the advanced, modular procurement solution on the Corcentric Platform can help transform your team from cost killer to influential business partner, schedule a personalized demonstration.