How Advanced Analytics Benefit Procurement

With brands the world over looking for ways to save money, marketing can often find itself under increased scrutiny. Procurement teams need to find ways to demonstrate the effectiveness of their marketing spend and justify ongoing support from upper management and the C suite.

As one might expect in 2022, one of the best ways to achieve this is through data and analytics. By leveraging the power of digital information, marketing procurement teams can deduce which areas of spend are yielding the greatest return on investment and which are failing to live up to expectations.

There are, however, many different areas of the marketing procurement process which advanced data analytics can shine a light on. Each can be deployed to make improvements to their respective processes.

Procure to Pay Cycle

As the systematic process a business follows to purchase and pay for marketing services, the procure to pay cycle integrates procurement activities with the accounts payable department of its organization.

However, the issue with most procure to pay cycles is that the information needed to adequately measure it is spread over multiple departments and is often siloed within them.

Data analytics can join up the dots and connect workstreams and data across the entire organization and give a far more accurate measurement of this essential metric. By breaking down the cycle into its composite parts, bottlenecks and other inefficiencies can easily be identified and addressed.

Agency Performance

One of the most effective ways to ensure your marketing budget is getting the most bang for its buck is measure the performance of the agencies your organization purchases advertising space from.

However, a lack of agency/supplier transparency can make measuring these metrics incredibly difficult.

By developing deeper relationships with suppliers, marketing procurement teams can gain greater insights into processes and greater resistance to disruptions. In sharing data across organizations, both sides of the procurement/agency relationship benefit from greater transparency, agility, and flexibility during the procurement process.

Contract Management

With advanced analytics, the business of contract management also becomes infinitely more streamlined. With the global nature of modern business, manually keeping track of all contracts and agreements can be an incredibly frustrating and cumbersome task.

With so many contractual plates to keep spinning, it’s little surprise that contracts regularly accidentally expire.

However, with contracts built into data analytics capabilities automated reminders can be assigned to alert procurement teams to upcoming renewal dates and allow them ample time to shop around for the most competitive deals – instead of scrambling to find one with a moment’s notice – as well as visualize contract expiration by multiple dimensions, such as product type, country, supplier location, direct vs. indirect spend, and more.

Invoice Price Variance

Negotiating great deals with agencies means extraordinarily little if your organization has no way to synchronize finance and procurement to ensure price paid matches the agreed upon rates. Tracking negotiated pricing against invoice amounts is essential to determining realized savings and communicating them to upper management.

Again, combining these metrics is often challenging because of the siloed nature of these departments.

Once you have a handle on invoice price variance it becomes easy to identify where these discrepancies between negotiated rate and price paid are happening regularly and address them at the source.

Rogue Spend

Any outlaying of funds which occurs outside specified marketing budgets can be defined as rogue spend. A certain amount of rogue spend is inevitable and indeed necessary but keeping it to an absolute minimum should be a priority for any marketing procurement team looking to justify its budget.

Data analysis can help procurement teams ensure agreements and contracts are more closely aligned with purchasing needs and increase the percentage of spend which is carried out under management. Procurement can use this information to shift future agreement amounts with each supplier to better align with company purchase preferences, thereby reducing rogue spend.

Final Thoughts

Procurement analytics have shifted from being a nice to have to a must have in recent years. Marketing procurement teams still relying on outdated manual processes are going to find it increasingly difficult to make their case to upper management in the future.

"When you have multi-billion companies invest in procurement spend analytics with millions of dollars, you know the process is serious business," writes Procurement Tactics. "A procurement manager can sort and recognize data which is important for his/her company’s growth. Data such as supplier costs, analysis on past and present spending, and even forecasts for future procurements are a really big help for creating a smooth procurement process for the future."

Procurement data analytics are sure to be a hot topic at ProcureCon Marketing 2022, taking place in November at The Westin Rancho Mirage Golf Resort & Spa, Palm Springs, CA.

Download the agenda today for more information and insights.