Clouding the procurement big picture can impact savings

Purchasing becomes a major source of cost savings when companies truly begin to understand their suppliers. Unfortunately, the 'big picture' of procurement practices is clouded by growing volumes of supplier data, mergers and acquisitions and disparate worldwide computer systems - making it difficult for an organisation to obtain an overall view of what they are buying and from whom.

All companies purchase goods and services, whether they are direct goods like electronic components and machined parts or indirect goods like office supplies and computers. Yet how do they understand the big picture and get an overall view that can assist in saving costs?

"Companies need to be able to leverage existing purchasing data - data that an organisation cannot easily access - and turn it into meaningful intelligence that can be used strategically in procurement activities," says Bruce Jones, manager of sales support at SAS Institute, the market leader in providing a new generation of business intelligence software and services that create true enterprise intelligence.

SAS's solution, SAS Supplier Relationship Management (SRM), helps companies collect, analyse and leverage supplier data and commodity purchasing history to make the most of their supplier relationships.

"As this solution delivers intelligence on suppliers and procurement activities, it helps organisations better understand their overall supplier landscape, minimise the risk associated with their suppliers, maximise their negotiation leverage, and achieve substantial savings in the process," explains Jones.

SAS recently announced plans to enhance its solution by including powerful new optimisation technology to let companies fine-tune their supplier portfolio, as well as data-input technology to ease performance monitoring of suppliers. These new components expand the SRM solution further, delivering more flexibility in optimisation choices through its template-driven interface.

Through SAS's award-winning data warehousing, companies can gather purchasing and procurement data from across the organisation and organise it in a procurement data warehouse. The solution can draw procurement data from multiple enterprise resource planning (ERP) systems, purchasing card and other financial data, data on supplier quality and delivery, and external financial and supplier data from government and other sources.

By analysing the warehoused data, companies gain insights into key business issues. With advanced SAS analytics in the optimisation engine, companies can enhance their portfolio based on goals to decrease costs, optimise the number of suppliers, and maximise negotiation leverage, for example, while meeting constraints such as the need for balancing small business purchases and meeting quality levels.

"Many companies store data about supplier performance in multiple locations," says Jones. "In some cases, it resides in ERP systems while in other cases, supplier performance or quality data for individual commodities or suppliers is in Excel spreadsheets, files of a regional purchasing group, or even in the memory of a commodity manager.

"SRM Data Input enables collaboration and sharing of non-operational information that impacts the sourcing process, facilitating purchasing related forecasting and performance monitoring. The previously uncollected data can be consolidated in the SRM data warehouse for analysis. SAS's SRM Scorecard delivers the analytic results to commodity managers, purchasing analysts and chief procurement officers so they can monitor and understand supplier performance to improve planning and decision-making."

SAS SRM Release 2.3 will be available next quarter.