Satish Purandare, Project Manager
Did you know that advanced analytics, when used in lieu of traditional statistical models, can help procurement departments increase cost efficiency by 3-8%?
The procurement department of any business generates more data than is humanly possible to compute and comprehend through traditional means. Advanced procurement analytics empower organizations to make smarter decisions that are backed by data and not rooted in personal biases or hunches.
Procurement leaders are increasingly turning to SAP S/4HANA as their solution of choice. In October, SAP launched SAP S/4HANA 2020, and while there are numerous features that make S/4HANA stand out from other ERP solutions, what truly differentiates this latest release for procurement is its compelling offering of:
- Procurement Analytics
- Operational Procurement
- Invoicing and Accounts Payables
- Centralized Procurement
- Sourcing and Contract Management
Some of its major features include:
- Real-Time Reporting
- Key Performance Indicators (KPI)
- Supplier Evaluation
- Spend Visibility and Spend Trends
- Invoice Processing Analysis
Lack of visibility is frequently cited as one of procurement’s key challenges, and one of the long-standing demands of the SAP user community has been to make procurement data available on a real-time basis. SAP answered this call with S/4HANA 2020, which provides analytical advantages by making it simple for users to consolidate disparate data and analyze it efficiently with a single click.
SAP S/4HANA provides a complete overview of the important parameters to measure supplier KPIs and performance in a very effective and impartial way. This information enables users to confidently narrow down supplier selection.
Its ability to evaluate suppliers based on their performance, delivery, quality, price and other key parameters makes SAP S/4HANA a Procurement Manager’s dream come true.
It’s critical for purchase officers and buyers to know the overall spend and calculate CAGR to negotiate effectively with their network of suppliers. SAP S/4HANA procurement analytics provide this crucial data quickly and accurately. With S/4HANA, users now also have augmented visibility into invoice processing with status and key metrics about supplier invoices such as:
- How many invoices are raised
- How many are processed
- How many are pending
Using this next-gen technology, a buyer can now find information like YoY spend per supplier and how their business has grown with a particular supplier – all of which comes in very handy during pricing negotiations. Having real-time insight into supplier invoice status also helps in building and maintaining robust relationships with suppliers.
In the near future, SAP will be able to develop a reporting interface using AI/ML technology, which can then be further transformed into an interactive BOT.
The use of advanced analytics can provide a deeper insight into procurement data and trends. Whether your organization is new to smart procurement or mature in its procurement transformation journey, SAP S/4HANA can help you turn procurement data into actionable insight.
We’d love to discuss your procurement objectives. Reach out to us at firstname.lastname@example.org to schedule a time to speak with one of our experts. https://www.mckinsey.com/business-functions/operations/our-insights/the-era-of-advanced-analytics-in-procurement-has-begun