The use of data is aiding procurement in achieving transparency and management of expenses.

The use of data is aiding procurement in achieving transparency and management of expenses.

Amazon Business is a client of Business Reporter.

Recently, data has become crucial in the functioning of procurement. Advancements in technology have made it possible to analyze an organization’s spending and identify areas that are not being managed. This data can then be used to inform important decisions. With the use of big data and artificial intelligence, companies can tap into a variety of information and trends, enabling them to better anticipate spending and demand patterns, as well as mitigate risk more efficiently.

European governments and industry associations are promoting the use of data innovation and insights to increase transparency, sustainability, and competitiveness. Those in procurement must also comply with strict GDPR regulations regarding data.

Procurement can utilize data in three primary methods for its daily responsibilities:

Supplier relationship management

Utilizing data can enhance the connections with important suppliers, allowing procurement to pinpoint the specific expenditures and suppliers involved. Once companies have identified their key suppliers and have clearer insight on spending, they can take action to strengthen these relationships.

From a risk standpoint, it is important to guarantee the financial sustainability of suppliers and to closely monitor for any potential complications that may arise. Additionally, there may be chances to collaborate on strategies for reducing costs, such as taking advantage of economies of scale or eliminating inefficiencies in the design process. Data can play a role in holding suppliers accountable and maintaining high standards and quality.

Nicolas Olague, corporate private sector leader at Amazon Business, emphasizes the necessity for companies to recognize the significance of managing supplier risks and maintaining positive relationships with them in the ever-changing European regulatory and market environment. He suggests that using an e-procurement solution like Amazon Business can assist in consolidating this crucial information and offering insights into expenditures, suppliers, and delivery performance.

“Organizations can utilize data to gain a deeper understanding of their spending with specific suppliers and their reliance on them,” he explains. “This can also reveal potential areas for enhancing cash flow and sustainability efforts. For example, Amazon Business offers a Guided Buying tool through its Business Prime feature, which allows procurement departments to guide internal customers towards sustainable or socially responsible options, such as products from local or small companies.”

Demand forecasting

Accurately predicting demand is crucial for organizations to effectively purchase the right amount of inventory and maintain an optimal stock level, resulting in improved cash flow. In Europe, the diverse business environment, unique market dynamics, and strict regulations create a complex scenario. Utilizing data can assist in forecasting consumer needs and identifying potential disruptions to supply or transportation that could affect stock levels.

One way to accomplish this is by determining past levels of customer demand and any fluctuations due to seasons, culture, or weather. Additionally, incorporating big data can also account for other factors. For example, long-term weather patterns or potential shortages in materials can be identified and taken into consideration for planning.

This data can also assist in determining the optimal purchasing time. Olague uses the PC and laptop market in 2022 as an illustration, as they were highly sought after due to the adjustments needed for the post-Covid situation. However, with limited stock, prices significantly rose. In contrast, this year, there is more available stock and less demand due to the average lifespan of laptops being three years. However, 2024 will bring about a shift once again, requiring companies to anticipate and prepare accordingly.

“In the coming years, artificial intelligence will play a crucial role in providing businesses with extensive data on their projected usage, utilizing historical patterns and anticipated growth strategies,” he explains. Accurately predicting demand can also lead to sustainability benefits, as it allows businesses to consolidate orders and reduce overall waste.

Cost optimisation

Data can uncover potential cost-saving opportunities by providing insights into overall spending that may have gone unnoticed. This could lead to opportunities for negotiating lower rates or identifying areas where excess inventory may be held. Additionally, it can flag spending categories where the business is overpaying, prompting a competitive bidding process or exploring alternative suppliers.

Olague emphasizes the possibility of decreasing uncontrolled spending, where individuals may independently acquire their own goods. He notes, “Some businesses only focus on their highest 30% of spending, leaving the remaining 70% unmanaged. This results in purchasing products at un-negotiated prices.”

“By using data to find out how much organisations spend with such suppliers, it’s possible to start putting in more processes and policies around such activity,” he adds, “directing internal customers towards preferred suppliers and mandating spend limits where desired. Spend can be channelled to fewer overall suppliers, opening the door to further reductions and rebates as a result of greater spending levels with individual suppliers and economies of scale.”

Olague concludes that Amazon’s Spend Analysis and Guided Buying tools can be helpful in providing necessary spend data and guiding employees towards approved suppliers and products. Proper utilization of this data presents a significant opportunity and can contribute to procurement’s overall objectives.

Visit to learn about how Amazon Business can assist in improving spend visibility and decreasing maverick spend for more strategic business purchasing.