Why You Need a Data Strategy
Your data strategy is a roadmap that outlines how your organization collects, manages, analyzes, and uses data to achieve its objectives. It’s an all-encompassing plan that incorporates the people, processes, and technology needed to leverage data effectively as a strategic asset for your organization. A good strategy should include clear goals, metrics, and performance indicators to measure your progress toward your goals and identify areas for improvement.
Establishing an effective data strategy is also beneficial for a number of other reasons:
- Data-driven decision-making: A well-defined data strategy enables you to make strategic decisions based on accurate and timely data. By analyzing relevant data, you can gain clear insight into supplier performance, market trends, pricing, and more to make informed decisions regarding supplier selection, contract negotiation, and risk management.
- Improved supplier relationships: Your data strategy also enables you to track supplier performance metrics like on-time delivery rate, identify shortcomings, and collaborate with suppliers to optimize their performance. This can lead to stronger supplier relationships and improved outcomes for all parties involved.
- Cost savings: Using your data, you can also pinpoint shortcomings within your procurement processes and find ways to eliminate them. This may include negotiating better contracts, consolidating suppliers, or automating elements of your supply chain management.
Ready to begin your procurement transformation and leverage the benefits of an effective data strategy? Explore Velocity’s comprehensive approach to data analytics and discover how you can use data to your advantage today.
Three Key Applications of a Data Strategy
Repeatable Risk Mitigation Strategies
Data can be a double-edged sword if not managed properly. On the one hand, it can provide essential insights that drive operational efficiencies. On the other hand, its misuse can lead to costly mistakes—relying on incorrect, unreliable, or outdated data can severely impact your ability to make strategic, informed decisions.
Because of this, it is essential to establish a repeatable risk mitigation plan within your data strategy to avoid potential risks and ensure the integrity of your data. This includes developing processes to identify and address sources of incorrect information, as well as leveraging technologies like natural language processing (NLP) and machine learning (ML) that can automate certain steps in your source-to-pay process.
Additionally, you need to train your employees on how to use data correctly and ensure they
have access to clear policies and procedures related to data management.
Pulling data from past purchases, market trends, and customer preferences is key for forecasting future supply and demand needs. In addition to traditional forecasting methods, such as historical trends and causal models, source-to-pay organizations should explore predictive analytics solutions that leverage AI and ML technologies to provide more accurate forecasts with shorter lead times. This allows for better alignment between supply chain planning and procurement decisions, leading to improved strategic sourcing outcomes.
Smart Portfolio Management
A solid data strategy enables you to track spending patterns across multiple categories and suppliers over time, making it essential for managing your portfolio. By analyzing purchasing patterns, supplier performance metrics, customer feedback ratings, and more, you can make informed decisions about which suppliers you should continue doing business with in the future. Additionally, this information can be used to inform your contract negotiations to achieve better pricing or payment terms when dealing with new suppliers.
Three Critical Steps for Optimizing Your Data Strategy
Create an Internal Data Baseline
Establishing an initial data inventory is the cornerstone for launching a successful data program, as it can help you explain why certain goods, services, business processes, or technologies were used within your organization in the first place. You can collect intracompany data such as:
- Expenditure trends
- Provider and customer details
- Quantities of goods and materials
- Contractual specifications and conditions
- Supplier performance assessments
- Consumer satisfaction reviews
By using this data to create a benchmark, you can easily monitor changes in your business landscape down the road.
Expand Your Data Set With External Sources
Contextual data is essential for ensuring your data strategy remains effective and relevant to the rest of the business world. This information encompasses various data sources, such as third-party metrics, governmental publications, market analyses, macroeconomic trends, or industry-specific research.
By incorporating these sources into your data strategy, you can accurately assess the current state of the marketplace as it relates to your organization and effectively implement risk mitigation strategies.
Cleanse, Analyze, and Review Your Data
An effective data strategy requires more than just collecting and compiling data from a variety of sources—you must also cleanse, analyze, and review your data regularly to ensure it delivers value to your organization.
Data cleansing is the process of organizing, standardizing, and removing outdated or incomplete information from your datasets that would otherwise impact your analysis. This step is critical, not only for accuracy but for eliminating cumbersome data silos that reduce visibility across your organization.
To be the most effective with your data strategy, you need to analyze all of the relevant information related to your procurement decisions. This includes cost savings opportunities, vendor performance metrics, and trends in the marketplace. By analyzing these elements thoroughly, you can determine which actions to take to increase efficiency within your source-to-pay organization.
Discover Your Data Strategy With a Procurement Specialist
At Velocity Procurement, we understand the power of data and how it can be used to optimize your source-to-pay operations. As your procurement specialist, we help you make sure your data strategy is aligned with your business objectives. This enables you to streamline the interplay between people, processes, and technology within your organization, make informed decisions, and realize significant cost-saving opportunities. Reach out today to learn more about how you can leverage data within your organization.