Why You Should Use Predictive Analytics to Unlock Your Procurement Potential

Author- Semmal KE, Marketing Materials

Increasingly, the life of a procurement professional requires more than just responding to procurement issues as they turn up. You need to forecast them before they happen and ideally avoid them altogether or, at the very least, mitigate their worst effects.
Fortunately, sophisticated machine-learning and AI is powering predictive analytics to give you the power to completely change how your company handles procurement.

Predictive Analytics’ Power Of Foresight

Finding meaningful patterns in huge amounts of data, predictive analytics lets you foresee changes in demand, recognize possible supplier risks, and spot chances for cost savings before they turn up on your doorstep. 
Some areas where it can have most impact include:

• Demand Forecasting: Predict future product and service demand, letting you minimize overstocking and stockouts, and ensuring you have the right products available when you need them.
• Supplier Risk Assessment: Evaluate suppliers’ performance and identify potential risks, then better diversify your supply base to avoid costly supply chain disruptions.
• Spend Analysis: Identify areas of overspending, highlight suppliers who offer lower prices, and pinpoint ideal times to purchase goods and services based on price trends and seasonal variations.
• Contract Negotiation: Discover cost trends, supplier pricing trends, and supplier performance in delivery, quality, and compliance with contract terms, and so negotiate better terms and conditions.
• Market Trend Analysis: Identify new sourcing opportunities and adjust procurement strategies accordingly, and so anticipate competitor moves, optimize pricing strategies, and reduce risks.

Implementing Predictive Analytics

• Data Collection and Integration: Start by gathering reliable and accurate data from internal systems, such as ERP and CRM, external data providers, and market intelligence reports.
• Technology and Tools: Invest in the right technology stack, which includes advanced analytics platforms, machine learning algorithms, and data visualization tools.
• Human Refinement: Having skilled data scientists and analytics professionals will allow you to build and refine predictive models, interpret the results, and translate insights into actionable strategies.
• Change Management: To ensure your team fully embraces a culture of data-driven decision-making, make sure to provide them with plenty of training and support.

The Walmart Case Study

Walmart is a prime example of a company successfully using predictive analytics. It uses historical data, online searches, page views, weather patterns, macroeconomic trends, and local demographics to forecast demand for holiday-related items. This data is then used to strategically place those items across distribution and fulfillment centers and stores, optimizing the entire shopping experience. This approach helps ensure that customers find the items they need, even during the busiest holiday season.

The Future of Procurement

Predictive analytics is revolutionizing procurement, enabling organizations like yours to gain valuable insights from vast datasets to streamline operations, reduce costs, and mitigate risks.

Ready to unlock the full potential of predictive analytics in your procurement operations?