Using Data to Make Smarter Purchasing Decisions
When it comes to procurement, there is a ton of data available to help you make decisions. The challenge lies in identifying exactly what to do with that information to glean valuable, actionable insight.
Here are a few to get you started:
1. Predict your costs and build a better budget
Think about all those times you've had to dip into your savings to make a purchase you didn't account for in your budgeting. Things break and need to be replaced or repaired; you run out of spare parts; your company grows and you need to equip new employees… there are countless unanticipated costs that come up in a given fiscal year. But what if you could anticipate them? Going back through your procurement data and looking at frequencies, quantities, or time periods of past purchases provides valuable insight about your future costs.
2. Spot peculiar price changes
Building strong relationships with your vendors is good business. After all, when you find a supplier that meets your criteria, why mess with a good thing? Well, for one thing, that good thing might not be as good as it was when you started buying from that supplier five years ago. As they say, "Trust, but verify." Go back over your purchase history and look at what you've paid for the same items from the same suppliers. Are there any strange price jumps? There are all sorts of reasons prices change-- but you don't want "unsuspecting customer" to be one of them.
3. Be a proactive buyer
Identifying your company's trends is the best way to stay ahead of them. For example, it might feel like you're buying the same conveyer belt replacements all year 'round, but the data may say otherwise: the bulk of your belt buys are in January and July. If you know that ahead of time, you can start looking in October and May, and shop around for the best deals. When you give yourself plenty of time, you don't have to sacrifice cost for expediency (or anything else, for that matter.)
4. Reduce downtime and increase efficiency You can use your purchase history to help you better understand the life cycles of your equipment. You may even discover areas where small changes in your operations could significantly prolong your assets' durability and functionality. Going back to the example above, you might find that you're replacing all of your conveyer belts after peaks in manufacturing. What if, instead of using the same belts continuously until they wore out and needed to be replaced, you started each year with a few extras that you rotated in during your busy seasons? You've found a way to reduce your downtime and save money, just by taking a deeper look at your data!
These are just four ways your procurement data can help you improve financial performance and grow your business-- and that's only looking at purchase history!