Procurement Analytics: What it is, Benefits, Tools & Use Cases

Procurement is tough. 

Every day brings the pressure of smart and cost-effective decision-making. The procurement process can be exhausting — evaluating suppliers, managing contracts, and the persistent challenge of balancing quality with budget.

How about technology makes all of this easy? 

Enter Procurement Analytics.

With analytics, your decisions become clearer, simpler, and more cost-efficient.

This guide will help simplify your tasks, identify cost savings, and predict future trends, giving you an edge in procurement processes. In the next sections, we’ll go through the essentials of procurement analytics, its benefits, and introduce you to the procurement analytics tools that make it all possible.

It is time to make your procurement process smarter and your decisions data-driven. 
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What is Procurement Analytics?

Procurement analytics is the systematic method of studying purchase data to streamline and improve the decision-making processes within an organization. It involves gathering, organizing, and interpreting data related to your company's procurement activities.

“What procurement needs is a better understanding of how to fuel our development.”

From the book The Procurement Value Proposition: The Rise of Supply Management by Gerard Chick and Robert Handfield 

The essence of procurement analytics is to provide clarity and depth to our understanding of procurement operations. It is about analyzing past spending activities to optimize future purchases. 

With procurement analytics, you can identify patterns, track performance, and predict trends, which are crucial for negotiating better terms with suppliers, managing risk, and ultimately saving money.

This data-driven approach ensures that procurement decisions are not based on hunches but on factual, historical evidence. 

Related Read:

• ‍‍What is Procurement Dashboard? KPIs, Templates & Examples
• Top 7 Procurement KPIs and Metrics You Must Track in 2024‍

See it in action
Procurement Dashboard

Key Objectives and Goals in Procurement Analytics

The overarching aim of procurement analytics is not just to inform but to transform. It equips procurement teams with the insights needed to drive efficiency, innovation, and value throughout the purchasing process.

The key objectives of procurement analytics revolve around enhancing visibility into spending patterns, improving supplier selection and collaboration, and optimizing overall procurement strategies.

How Can Analytics Improve Procurement?

Analytics in procurement can transform raw data into insightful and actionable information. It refines the decision-making process, allowing procurement teams to move beyond traditional methods and embrace a data-driven approach. See how:

• Data-Driven Decision Making: At the heart of analytics in procurement is the shift from instinct-based decisions to data-driven decisions. Analytics provides a granular view of spending patterns, enabling procurement teams to make informed choices based on historical data and current market conditions.

• Streamlining Procurement Process: Analytics can identify inefficiencies within the procurement cycle to work on them. This can positively impact reduced cycle times, streamlined workflows, and automated tasks that were heavily resource-driven.

• Supplier Optimization: It serves as a lens to assess supplier performance critically, fostering mutually beneficial strategic relationships. It allows teams to pinpoint suppliers that consistently meet quality and delivery standards.

• Cost Reduction: Identifying cost-saving opportunities becomes automated with analytics. Trends in spending are analyzed, revealing where expenses can be cut down without compromising on the quality of goods or services received.

• Risk Management: The predictions by analytics help procurement professionals anticipate risks and prepare contingency plans. This proactive approach to risk management ensures that supply chains are resilient and responsive to market dynamics.

Benefits of Implementing Analytics in Procurement

The integration of analytics into procurement processes not only optimizes operations but also unlocks a host of benefits that contribute to the procurement function's overall agility and strategic capability.

• Strategic Sourcing: Analytics improves sourcing strategies with a deep understanding of supplier landscapes and market fluctuations. This strategic change supports procurement in aligning sourcing efforts with business goals better.

• Enhanced Negotiations: With a comprehensive analysis of spending and supplier data, procurement teams have insights for robust negotiation of competitive and fair contracts.

• Compliance and Control: A data-centric approach also covers compliance with policies and regulations. It gives a transparent view into procurement operations, making sure that every transaction aligns with set guidelines.

• Performance Measurement: Implementing analytics introduces KPIs and metrics, laying the groundwork for ongoing improvement. These performance indicators serve as benchmarks for procurement success and drivers of strategic refinement.

• Innovation and Growth: Analytics is the catalyst for innovation within procurement. It uncovers opportunities for savings and efficiencies that can be harnessed to support the procurement department and the company's growth trajectory.
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Embedded Analytics for Procurement 

Embedded analytics for procurement integrates real-time data insights into your existing procurement software, improving decision-making within a familiar workflow. This integration allows teams to access real-time metrics, like spend analysis and vendor performance, leading to agile responses and informed actions.

Real-time data and automated analysis streamline operations by minimizing manual effort and errors. User-friendly dashboards demystify complex data, making insights accessible to all team members, not just data specialists.

The strategic impact is clear: Embedded Analytics elevates procurement from a supportive function to a core component of business strategy, driving cost savings and operational efficiency. 

Overall, embedded analytics simplifies procurement processes and aligns them with the broader business objectives for sustained growth. 

Now, get ready to explore some of the best procurement analytics tools (including embedded analytics options).
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5 Procurement Analytics Tools

Even the most skilled craftsman cannot give 100% without the right tools. Similarly, every procurement professional needs the best analytics tools to make the most of the data. Here are the best 5 procurement analytics tools to help you transform procurement data into actionable insights.

1. Databrain

Databrain helps you implement procurement analytics without training your team on a new tool. This software development kit (SDK) solution can add analytics functionalities to your existing applications. Its embedded analytics are designed to be integral to the user experience, enriching your application with deep insights without the complexity typically associated with BI tools.

Key Features of Databrain:

• Highly customizable: Databrain's platform offers multiple customization options and white labeling, so the analytics experience is similar to the rest of the procurement tool’s UI.

• Drag-and-Drop functionality: Databrain allows for effortless construction of complex insights, making advanced procurement analytics accessible to all skill levels within your team.

• Scalable solutions: Build and deploy dashboard experiences that handle vast quantities of data with ease, turning information into actionable insights.

• High security: With end-to-end encryption and compliance with major standards like SOC 2 and GDPR, Databrain ensures that your data is protected at all times.

• Connects multiple data sources: Whether real-time or historical data, Databrain connects with various databases and warehouses, bringing all your data under one roof for comprehensive analysis.

See it in action
Procurement Dashboard

2. Procurify

Procurify is an all-in-one procurement management platform that centralizes every aspect of the procure-to-pay process, providing clarity and control over company spending. Its real-time spend visibility and comprehensive features set it apart from traditional procurement tools, making it a strategic choice for businesses aiming to automate and optimize their purchasing workflows.

Key Features of Procurify:

• Centralized Procurement Management: Offers a single source of truth from purchase request to payment, enhancing communication and documentation.

• Custom Approval Workflows: Tailors approval processes to fit the organizational hierarchy, ensuring accurate and timely approvals.

• Intuitive Purchase Requests and Order Management: Streamlines purchasing with easy-to-use interfaces for desktop and mobile users, improving department efficiency.

• Vendor Management and Insights: Keeps all vendor information easily accessible, supporting informed decisions and relationship management.

3. Ivalua

Ivalua is designed to provide a complete view of procurement operations through its integrated analytics layer that covers the entire source-to-pay spectrum. Its standout feature is the ability to unify data models, ensuring that information is accessible and actionable for procurement teams.

Key Features of Ivalua:

• Unified Data Model: Ivalua's single analytics layer allows access to and display of data from any procurement process.

• Real-Time Data: The platform offers an extensive catalog of standard reports for immediate insight.

• Actionable Insights Across S2P: Enhances decision-making with comprehensive analyses and user-friendly dashboards.

• Direct Actions from Reports: Users can initiate actions directly from reports and dashboards, streamlining the procurement process.

4. Jaggaer

Jaggaer is a procurement analytics powerhouse, embedding prescriptive, predictive, and intelligent analytics across its JAGGAER ONE platform. It offers a unified view of procurement activities and outcomes, delivering tailored reports for stakeholders with embedded intelligence.

Key Features of Jaggaer:

• Operational Analytics: Provides visibility into sourcing events, contract compliance, and category management to enhance procurement processes.

• Broad Spend Optimization: With insights across all spend categories, Jaggaer enables performance improvements and delivers tangible results.

• Flexible Integration: Offers a robust framework for seamless integration with enterprise systems and third-party solutions, ensuring data integrity and security.

• Customized Solutions: Jaggaer's solutions are designed around specific business challenges and processes, offering a personalized approach to procurement analytics.

5. Basware

Basware Analytics is another comprehensive platform designed to streamline the complexity of procurement data into actionable insights. It centralizes invoice data for a complete operational overview and equips businesses with the predictive capabilities to forecast future spending effectively.

Key Features of Basware:

• Holistic Spend Analysis: Offers a deep dive into spending patterns, cash flow, and supplier engagement to drive critical operational decisions.

• Predictive Analytics: Utilizes data to anticipate future spending, payment needs, and process efficiencies, allowing for strategic financial planning.

• Supplier Performance Metrics: Enables monitoring of supplier lead times, fulfillment, and delivery quality, fostering robust procurement strategies and supply chain risk reduction.

• Process Optimization Insights: Identifies process bottlenecks and invoice exceptions, streamlining procedures to enhance efficiency and reduce costs.
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Embedded Analytics for Procurement Use Cases

Embedded analytics is the linchpin in converting procurement data into a strategic asset, helping teams with real-time insights for smarter decision-making across various procurement functions. 

Here’s how it works:

1. Spend Analysis and Cost Management

Embedded analytics highlights the key spending areas where costs can be cut down without compromising quality. For example, a company might find that a lot of its budget is going to a few suppliers and use this insight to negotiate better rates or diversify its supplier base for enhanced cost management.

Related Read: What is Spend Analytics? Explore From Benefits to Best Software

2. Supplier Performance Assessment

Procurement teams can objectively measure performance by evaluating supplier data on delivery times, quality, and compliance. Imagine a dashboard that flags suppliers who consistently miss deadlines, prompting timely interventions or a search for more reliable alternatives.

3. Demand Forecasting

Accurate demand forecasting means less waste and more efficiency. Embedded analytics can help predict spikes in demand for certain materials, allowing a business to adjust its inventory accordingly and avoid surpluses and shortages.

4. Contract Compliance and Management

Ensuring suppliers adhere to contract terms is a breeze with embedded analytics. They can automatically track contract fulfillment rates and alert procurement managers to discrepancies, prompting quick resolution and upholding contract integrity.

5. Procure-to-Pay (P2P) Process Optimization

Embedded analytics can streamline the entire P2P process, from procurement to payment. By identifying bottlenecks in real-time, such as delayed approvals or slow invoice processing, organizations can continuously refine their P2P workflows for optimal performance.
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Challenges and Considerations in Implementing Procurement Analytics

Implementing procurement analytics can transform an organization's purchasing strategy, but it's not without its challenges. Understanding the common hurdles and considerations can help ensure a successful integration.

• Data Silos and Integration: Organizations often struggle with scattered data across different departments and systems, making it challenging to consolidate into a single, actionable format.

• Change Management: Shifting from traditional procurement methods to a data-driven approach requires a cultural shift within the organization, which can meet resistance.

• Data Quality and Consistency: Ensuring data accuracy, completeness, and standardization is crucial for reliable analytics but can be difficult to achieve.

• Skills and Expertise: Finding or developing the right talent to manage and interpret analytics can be a significant barrier, as it requires a mix of procurement knowledge and technical acumen.

Now that you know the common challenges you might face while implementing procurement analytics, below are a few things you can consider to be prepared for these challenges (or avoid them altogether).

• Defining Clear Objectives: Before implementing procurement analytics, you must define what you want to achieve and ensure your analytics strategy aligns with broader business goals.

• Selecting the Right Tools: Choosing analytics tools that integrate seamlessly with existing systems and are user-friendly is critical for adoption and success.

• Ensuring Data Privacy and Security: With the increasing amount of data being processed, adhering to data privacy laws and ensuring the security of sensitive information is paramount.

• Ongoing Training and Support: Continuous education and support for users are necessary to maintain the effectiveness of analytics tools and foster a data-driven culture within the procurement team.

DataBrain helps in overcoming all these challenges. The embedded analytics solution integrates scattered procurement data, creating a cohesive analytics environment. It ensures data integrity, providing reliable analytics while minimizing the need for in-depth technical skills. DataBrain equips procurement teams with the clarity and insights needed for strategic decisions, all within a user-friendly interface.

Build your procurement analytics solution

Future Trends in Procurement Analytics

With technology advancing at light speed, artificial intelligence and predictive analytics will make procurement analytics more efficient. Blockchain technology will add more transparency, while the Internet of Things (IoT) ensures real-time tracking and inventory management. 

Additionally, analytics tools will start to include sustainability metrics, like energy consumption, carbon footprint, and so on, empowering organizations to track and improve their social and environmental impact. 

These advancements show a more strategic procurement approach that values efficiency, innovation, and ethical practices.
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Conclusion

Procurement analytics transforms data into strategic business insights, driving smarter decisions and sharpening competitive edges. It's all about getting more from every dollar spent and making sure each part of the procurement process works better. 

The right procurement analytics tools like Databrain help predict needs, check on suppliers, and save time and money. Adding analytics can be a roadmap for smarter spending and smoother procurement operations, setting businesses up for success now and in the future.

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