How can Business Intelligence (BI) help the purchasing department?

Using Business Intelligence to support the purchasing function
December 24th, 2020
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Behind Business Intelligences lies a whole set of technologies that enable companies to gather and analyse their data to make informed decisions. While the volume of data is increasing exponentially, the purchasing department has every interest in using this tool to guide its strategy.

What is Business Intelligence?

Business Intelligence enables us to gather internal and external data, whether structured or not, and to process it for analytical purposes. Users can create various views through reports, dashboards or data visualisation. This information, which is based on real-time events, helps a company's decision-makers guide, accelerate and improve their decisions.

Today, these tools have become essential in obtaining an overview of the business and putting in place key performance indicator tracking and metrics.

BI used for purchasing 

With Business Intelligence, the purchasing department can access relevant and precise summarised data on supplier spending, the supplier database, etc. This includes the actual and forecast turnover, the history of contact and disputes, the prices negotiated, the organisation of contracts, etc.

It can therefore view and extract this raw data very quickly to make it understandable and accessible to all, as well as to take informed decisions. With this tool, all the Purchasing Department's communications are improved. With supporting figures and facts, it can collaborate better with the other departments and Finance in particular, as well as consolidate its strategic position within the company.

 Resistance to BI 

Developing this type of technology is not without pitfalls. There are two major obstacles:

  • First of all, the complexity of its use requires specific internal skillsets such as those of analysts, architects or Business Intelligence developers. However, today's solutions are aimed at other company employees, executives and operational staff: they are easy to master and enable us to customise the management tools. We then refer to self-service BI.
  • Secondly, the data's quality, reliability and utility may be a new barrier. For example, this may be the case within companies where supplier creation is not centralised or approved by the Purchasing Department. The data warehouses, where the data is stored, must be well populated before making any queries.

Today, the era of Big Data is giving way to Smart Data. Now, Business Intelligence programmes can go even further by integrating advanced analytics and data or text exploration tools, etc. Boosted by BI, it is the purchasing department's responsibility to implement a Purchasing Intelligence approach, to enhance their company's performance.

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