The Significance Of Business Intelligence On The Improvement Of Strategic Sourcing

Application of Business Intelligence (BI) solutions through robust tools help in effective and timely procurement of goods. It also resolves frequently occurring customer/supplier conflicts by providing a broad variety of benefits to both the parties. In order to optimize high-dollar-value purchases, many progressive companies are employing BI operations. Business Intelligence helps in improving the organization’s procurement process through strategic sourcing of vital components in a systematic and data-oriented manner. Traditionally, companies were depending on the procurement and purchasing departments to conduct their strategic sourcing, but now BI tools and techniques are used by almost all departments in order to maximize on the overall effectiveness of result-oriented operations.

Understanding Customer Feedback Through BI Techniques

Business Intelligence is helpful in understanding the quality and quantity of feedback from the customers. The process of evaluating client response has been identified as a convoluted process which is now getting solved through customized algorithms imbibed in Business Intelligence software. The absence of a clear understanding of their own performance is driving many industries to harness the data-centric approach of BI to decipher periodic performance of the manufacturing and sales department. This type of evaluation further helps companies understand growth in relation to that of their competitors.

There exists a digital error in all Business Intelligence software. This situation arises because BI tools and functions are dependants solely on data which though gives its operations objectiveness, but it also makes it prone to factual errors. Companies fear that the data provided by the suppliers, customers, and competitors might not be accurate. In order to effectively perform strategic sourcing, customized BI tools are developed and employed by companies to ensure that data entries are verified and checked.

Various Ways Business Intelligence Tools Are Becoming Significant

BI uses futuristic technology by using analytics and software. It restores and mines data from Enterprise Resource Planning systems (ERP), and data-warehouses before getting transformed into usable and applicable facts and figures. The technology helps in summarizing raw data into real-time information which is meaningful and fact-based. This information aids in the simplification of the decision-making process which helps companies solve long-standing information-related problems.

Earlier, the relationship between the supplier and the customer lacked transparency because of which the prime objective of conducting cheap acquisition was affected. However, by using BI technology, the trading and contracts between the source organization and the manufacturing company are becoming more symbiotic and transparent.

BI backed strategies are helping buyers obtain quality goods and services by required delivery date (RDD) at the best and cheapest prices. By incorporating Business Intelligence and predictive analysis techniques, sourcing organizations are developing more business with advanced approaches and insightful proposals.  It is observed that the active and periodic use of Business Intelligence optimizes sourcing by lowering costs of acquisition and operations in order to reduce the Total Cost of Ownership (TCO).

BI enables automated purchasing

Experts believe that using Business Intelligence market research can also reduce the workload of procurement professionals. Procurement professionals are expected to be experts on the procurement rules of their organization and the general marketplace. BI tools help them focus on their core responsibilities on conducting strategic sourcing rather than employing their time in redundant and time-consuming data sampling. BI solution’s dashboard with associated data and reports help in easing the mechanism of automated purchasing.

How Business Intelligence Helps Perform Automated Purchasing

The working of Business Intelligence in securing automated purchasing can be ensured by digitally labeling the products and services with specialized codes. United Nations Standard and Service Code (UNSPSC) and other taxonomy assigned to the products and services help in the automated evaluation of BI metrics as raw data. Through periodic and long-lasting evaluations of the internal operations of the procuring company, strategic sourcing can be achieved by identifying the most important and favorable sourcing agencies for automated purchases.

This is succeeded by BI tools automating the requests for a particular product to these sourcing agents mentioning a customized quote and budget. Through automated feedback from the supplier (which meets the criterion of favored price, time of delivery and the quality), an electronic purchase order is placed. Through this process, the buyer (the procurement professional) need not get directly involved with the buying process. Strategic suppliers are organically identified with little to no human intervention and are proven to generate business opportunities.

BI techniques are directly dependant on Information Technology. As a result, BI solutions effectively work in companies which have an overall supply chain system powered by sensors and meters which are actively collecting data. This generates a complex and layered digital structure of the operations in the company and helps BI tools to understand the company’s requirement in the best possible manner.  

Most companies today are engaging in strategic sourcing by employing business intelligence in most of the ERPs (Enterprise Resource Planning). The proper and planned use of BI tools benefits the company to find cost and time-effective modes of sourcing. It also ensures the identification of emerging sourcing organizations and their growth.


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