How Enterprise Analytics for Procurement Improves the Bottom Line
By Terry Penner, Data and Analytics Solution Strategy & GTM, SAP
“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” These words of wisdom from James W. Frick, the former vice president for Public Relations at the University of Notre Dame, is a timely description of how procurement guides organizations through disruption with due diligence and accountability.
But there’s still plenty of room for improvement. Oxford Economics found that only 54% of executives say their procurement technologies help them make data-driven decisions about spend. Unfortunately, this means that the remaining 46% still rely on highly manual processes and making decisions slowly and with little visibility.
How can procurement organizations pivot their technology to embrace data and analytics faster and with greater ease? When using SAP Ariba and SAP Fieldglass solutions, the answer is integrating enterprise analytics capabilities.
Gaining a clear view of overall spend
Just imagine the possibilities of seeing every purchase made, contract negotiated, and cost saving identified with one view in a single glance.
- Know whether a buyer obtained a purchase order before completing a transaction.
- Calculate optimal order size to fulfill business requirements and qualify for a discount.
- Determine if employees are working at maximum capacity and could use the help of contingent labor.
- Help ensure a purchase is compliant with current regulations, supplier contracts, and internal policies.
- Govern supplier adherence to contract terms, including discounts, delivery, and other expectations.
By using enterprise analytics with procurement solutions, procurement organizations can achieve this level of insight across four areas of spend visibility.
Foster contract and purchase order compliance by proving the quantitative benefits of following existing processes and tapping their organization’s supplier network. Business buyers can investigate whether best practices are optimized and used as expected by evaluating supplier performance and comparing cost-center spend with indirect purchases for individual purchasing groups.
- Process efficiency
Improve invoice processing efficiency by monitoring exceptions to help ensure proper compliance of supplier agreement terms, such as order quantity, quantity received, and pricing terms. Organizations can use intelligent automation to handle simple payment transactions. But when a solution detects an exception, the invoice can be routed to the appropriate procurement professional to reconcile it.
- Savings in sourcing
Scrutinize savings captured by business systems to understand which materials are sourced through established contracts. With predictive analytics capabilities, organizations can deepen their insight into actual savings that do not match those negotiated for commodity transactions, cost centers, and suppliers.
- Working capital
Measure key performance indicators to maximize working capital. Procurement organizations can display the impact of following establish supplier terms compared to a maverick purchase. Analytics tools can also help ensure early payment discounts negotiated with suppliers are achieved through efficient invoice processing.
Each of these four areas of insight are included in the Enterprise Analytics for SAP Ariba prebuilt content package, available with SAP Analytics Cloud and SAP Data Warehouse Cloud.
Reimagining procurement’s role business-wide
While rediscovering their true influence company-wide, procurement leaders can open their team to a new world of transparency, connectedness, and decision-making with recent advancements in enterprise analytics.
But the advantages are much more than recovering profitability and finding new ways to preserve cash. Procurement organizations can prepare all business areas for emerging challenges in supply and market dynamics, volatile demand, and de-risking the supply chain – all hallmarks of a strategic future.
Interested in learning more? Explore Enterprise Analytics for Spend Management. You can also try free trials of SAP Analytics Cloud and SAP Data Warehouse Cloud to explore how the solution can help you achieve significant business results.