A procurement technology expert warns that procurement professionals seeking to achieve optimal cost reduction for their organisations are being hampered by insufficient data in their spend analytics. Writing for Future of Sourcing magazine, procurement tech expert, Tim Johnson cites an estimate from IBM Watson that 80% of the world’s data is ‘unstructured’ – not stored in a digital form available to a system or database designed for reporting or analysis purposes (a ‘transaction system’).
Much of this is data included in paper records, although some are stored in digital documents on a shared drive or as organised digital files in a procurement management system. But if not visible to a sophisticated spend analytics system, it cannot be factored into decision making. There is a solution: natural language processing tech can extract the unstructured data included in these ‘invisible’ documents and place it into a database, where new machine learning models can organise and analyse it for spend analytics purposes. What was unstructured and invisible becomes visible and meaningful.
Johnson says that artificial intelligence tech can store data harvested by natural language processing in a secure repository where it can be easily viewed. It also structures hitherto unstructured unused data into relevant categories that enables procurement professionals to access a level of detail that takes them deeper than conventional aggregate supplier and category spend information. AI renders the newly-structured data visible and permits it to be exported to inform supplier/sourcing savings decisions, pricing strategies, and negotiation. The outcome is better business decision-making all round.
The technology is expensive, but it doesn’t necessarily have to be bought: a cutting-edge procurement consultancy offering procurement as a service can provide it. As Johnson puts it, with this technology rendering the previous invisible visible, “… procurement leaders can spend more time looking at the important data points and use them to make decisions and drive true value to their business partners through better spend management.”
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.