The Role of Data Analytics in Procurement
Data Analytics Can Help You Save Money on Purchasing
Making decisions for your business is all about using the information you have to ensure future success. That’s why every operator should leverage data analytics in procurement. By tracking your spend, you can make informed decisions on which products to buy and how much inventory to stock.
The First Step to Data Analytics in Procurement
You know that data is an important tool to leverage for purchasing, but how can you get the data you need? There are many digital platforms that can be integrated into your procurement software. If you work with a group purchasing operation like Foodbuy Hospitality, you likely already have access to a data analytics platform.
Foodbuy Hospitality Members use MPower, our in-house solution to data management and spend reporting. Users can create and download reports on current spend and potential savings opportunities. Plus, important data is easily accessible from a user-friendly dashboard.
Optimizing Purchasing Plans
Leveraging current spend data to choose products and services is one of the most obvious ways to use data analytics in procurement. When you know exactly how much you spend on each category each month, you can easily spot areas for improvement.
Additionally, some data platforms will allow you to view SKU-level spend. That way, you can determine which products cost you the most each month and whether you need to make a change. Calculating figures like food cost percentage and RevPAR can help you effectively use the numbers you have to make improvements.
Stocking Inventory Based on the Numbers
When purchasing supplies and equipment for your operation, it’s easy to both under order and over order, depending on the item. Luckily, you can use data analytics in procurement planning to streamline orders, SKU by SKU.
You’ll want to take note of the following:
Product amount per order period
Leftover product at the end of each order period
Orders for products that have similar uses
First, you want to know how much of each product you order each month. Next, you’ll want to assess how much product isn’t used between orders. These first two numbers will tell you if you’re over-ordering. You’ll also want to note if you run out of product early to determine if you’re under ordering.
Finally, assessing how many different SKUs you order for similar uses will help you determine if you have opportunities for SKU reduction. For example, if you order several types of spray cleaners for housekeeping, you can assess whether you should switch to a larger order of just one product that can be used in each situation.
Start Using Data the Right Way
Integrating data in your procurement process can allow you to save money with every order. It can also help you keep track of your most-essential items and maintain transparency with your procurement partners.
If you’re interested in using MPower, Foodbuy Hospitality’s data analytics solution, become a Member today.