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Procurement Data – Focusing On The Data
- Procurement data is the cornerstone of procurement processes, providing crucial information for effective decision-making.
- External procurement data, sourced from outside financial databases, aids in understanding the business environment.
- Internal procurement data, obtained from the company itself, includes supplier data, transactions, and financial records.
Considered as the “core” of procurement processes, procurement data provides all the information necessary for a procurement manager. Procurement, as we know, is continuously transforming into more complex forms.
It is why a better understanding of what composes procurement data can enable businesses to have an outstanding grasp of their company’s procurement processes.
In this article, procurement data will be the prime focus. Procurement processes are a thing to understand, but you should also know the importance of the data that you are gathering.
Obviously, procurement is rigorous already, and having to waste all that effort is the last thing a procurement manager would want to have on his plate.
Procurement Data – What is it?
Simply put, it is the star of the procurement process. Procurement data is any information about the procured goods or services of the company. There are two types of procurement data that a business can access: External and Internal.
External Procurement Data
Simple and direct, a company sources this procurement data from outside their financial databases. External Procurement data helps the company level their playing field with outside competitors, by having a general grasp of the business environment.
External Procurement Data includes:
- Market reports – provides value and direction to realize procurement objectives.
- Bank information – provides visibility and transparency for a business’s procurement process through risk assessment.
- Public Financial Statements – provides information that can help the procurement team take a firm and robust decision regarding their procurement strategies.
- External Analytics Database – allows a business to streamline their procurement data and saves time for the procurement team to strategize more.
In a nutshell, External Procurement Data enables a business procurement process to go up to par in the ever-changing field of business. By having access to this type of procurement data, a company can ably direct and focus on their performance.
Additionally, it allows them to develop data-driven decision-making on their procurement strategies that does not solely rely on their own database. With no one wanting to be behind, Procurement continuously proves itself a complex field that steadily grows more complex.
Ultimately, a procurement team can consider External Procurement data as a ‘treasure trove’, only if they can ably utilize the resource to the fullest effect, through an efficient procurement strategy.
Internal Procurement Data
On the other hand, This procurement data is directly from the company itself. It includes supplier data, transactional data, and other financial records of the company, which includes the general ledger, among others.
Additionally, an integrated procurement database enables a company to efficiently strategize their procurement processes. It enables the company to avoid mistakes on their data, not limited to procurement data, consistency with information, and an overall improvement with data processing.
Conclusively, Internal procurement data simplifies the company’s procurement processes, reduces the data gathering time required for procurement strategy, and has a strong and consistent way in handling the already complex procurement.
Other internal procurement data includes:
- E-mails – efficiently provides B2B (Business-to-Business) transactions that a company utilizes to reduce communication lag, therefore improves delivery of procurement strategy and procurement processing.
- Excel Spreadsheets – enables the company to effectively monitor procurement activities. This centralized procurement data source makes it easier to track the necessary information (e.g., purchase invoice, receipts) that the company uses in the procurement process.
- Procurement Management Software – Streamlines most of the complex procurement processes that usually takes too much of the time. It includes procurement data centralization, better management of purchases, and generates an overall simplified procurement processing.
- Accounting System – provides procurement data that allows the company to strategize on their costs, and effectively handle their acquisitions with an optimized amount of spending.
Importance of Knowing the Difference of External and Internal Procurement Data
Knowing where the procurement data is sourced enables the business to improve its quality, enhance their decision making, and strategize more effectively in the procurement processes.
Moreover, by effectively segregating the gathered procurement data, the company can effectively address their specific needs in each matter that calls for the proper information. Messy procurement data can be chaotic and give no proper direction to a company.
it can increase the obstacles that the company will be facing. This is since they have no direction and clear information that could have been provided by a well-sourced procurement data.
Knowing where to source procurement data is also important for it smoothens the whole procurement process for both the procurement team, and the company. Simply knowing how is not enough, since it does not assure the quality of the procurement data.
Overlooking this procurement process often leads the company to neglect the proper checking of the procurement data. By being more hands on with the procurement data, the procurement team can segregate even more, and eventually, provide a more optimal procurement strategy.
Accordingly, having too much procurement data and needlessly using it could make the whole procurement process of a company explode. Having less procurement data can leave a company in the dark and lose the playing field.
In the end, it all comes to knowing and understanding this vital information that eventually affects the general procurement process of a company.
Procurement Data Management
Given the value of where Procurement data is being sourced, it is also important to know how the Procurement team handles this information. This process is called Procurement Data Management. Here, the procurement team gathers, assesses, and optimizes the precious procurement data sourced externally, or internally.
By doing so, the procurement team takes time to make the value of the procurement data be more understood, accurate, and effective in the eventual procurement process of the company.
For a better grasp, we must know
The Components of Procurement Data Management
A process does not simply do out of the blue, more so those done for Procurement. It is also important to know what composes Procurement Data Management. By knowing, it can help the procurement team optimize each component to assure the quality of their procurement process, and the overall value of the company.
The following components of Procurement Data Management are as follows:
1. Data Identification
Knowing the important procurement data is vital as a starting point. By properly assessing the information that is gathered, the procurement team can know how to deal with formulating their procurement strategy.
2. Data Quality
Consequently, in the process of assessing the procurement data, the procurement team checks the quality of the information. This allows them to calibrate their strategy, and ensure that it will not jeopardize the procurement process.
3. Data Collection
By making sure that the procurement data’s quality is up to standards, it can now be viable for collection. Collected data will now be segregated accordingly so the next step can be done fluidly.
4. Data Analysis
As all collected data is used, the procurement team is now ready to analyze and evaluate the information they have collected. At this point, the company can already utilize data once the procurement team is done. Be it for streamlining the company’s procurement process or making sound and data-driven decisions that can improve company value.
5. Data Integration
Once the procurement data can be converted for data-driven decisions, the company can now easily adapt the analysis done by the procurement team.
6. Data Security
Of course, procurement data is company property. Ensuring its security should be as important as collecting it. Having a robust security ensures a company’s procurement edge against their competitors.
Procurement Data Management is an integration of select components that can assure a company’s smooth flow of. Each component is as important as the other as it ensues an organized execution of the procurement process. With the components already set, one must be able to know
The Process of Procurement Data Management
With the already present procurement knowledge, on data, sources, and quality. It is safe to follow a procurement process that can effectively streamline the gathered information into quality action.
1. Data Streamlining
Sourcing from various facets, Procurement Data must be streamlined in order to understand its quality, its use, and its value in the company’s procurement process.
2. Data Segregation
Once the procurement data has been streamlined, and better understood, the procurement team must be able to segregate accordingly to the importance of its use in the company, and how it can affect the procurement process. By having an organized flow of procurement data, the process can go smoother.
3. Data Implementation
Now that procurement data can be easily utilized, the procurement team can have one last check to assure its implementation.
Procurement Data Process can be summed up into three parts, but what builds this three-step process is what makes it hard and complex to execute. An effective procurement team makes sure that this process can be followed by strengthening its components.
So Why is Procurement Data Management Important?
Procurement Data Management also streamlines the general process of segregating valuable procurement data. The quality of the sourced procurement data maybe jeopardized without a sound and efficient procurement data management.
Consequently, an efficient procurement team can work on the optimization of their own procurement data management system. By being able to do so, there would be a smooth flow of the company’s business dealing, in terms of operation, purchasing, and cost/spending management.
Benefits of Considering Procurement Data, and Its Management
Procurement data quality is very important for a company to consider, more so its procurement team. It can help provide the company with the following:
- Manage costs
- Establish strong supplier relationships
- Streamline purchasing information
- Smoothen procurement process flow
- Enhance procurement data quality
As enticing as the following benefits of having an effective consideration of both Procurement Data (its quality), and procurement data management, only the company’s procurement team can effectively manage, handle, and optimize these certain processes for the benefit of the company.
Indeed, procurement data quality is integral in a company’s procurement process. Handling its quality should be of utmost importance for a procurement team that aims to optimize their company’s long-term results.
This can be achieved by being able to formulate an effective procurement data management plan that serves to clarify and strengthen the nitty-gritty of the company’s procurement process. Simply putting things together, quality information, without an expert hand dealing with it, is as good as any other mediocre information.
Are There Any Challenges to Procurement Data Management?
Procurement data management is not without its specific challenges. These challenges must be overcome by the company’s procurement team in order to maximize the quality of their procurement data. These are some of the challenges faced by a procurement team when it comes to handling precious procurement data:
1. Data Exploration
The variety of data available for procurement is as complex as the process itself. It is why procurement data exploration is an important hurdle to be passed through. It helps enhance the quality of gathered procurement data, and even information that could increase the potentiality of a company’s procurement strategy.
2. Data Merging
Procurement data, as said earlier, is gathered from various sources. It is important for a procurement team to efficiently segregate the quality of procurement data being gathered. By effectively consolidating their sources, the procurement team can formulate better procurement strategies for the company.
3. Data Enrichment
Procurement data has an inherent quality that the procurement team can potentially increase. By resolving the challenges like the previous procurement data merging, a company can increase procurement data quality by two-fold or even more.
4. Data Bridging
Procurement data bridging, different from merging, but all the while same purpose in consolidating precious procurement data. A company’s procurement team can utilize various existing procurement data sources in order to enhance their own procurement data source, and be up to par with the business environment.
5. Data Visibility
Procurement data visibility is also important. This challenge is perhaps the linchpin of the previous procurement data challenges. As resolving the previously mentioned processes can help resolve this procurement data challenge. Procurement data visibility enhances interaction for the company, thus creating more value for the business overall.
With the mentioned challenges, one can understand the intricate processes and challenges that the procurement team must consider when formulating an effective procurement strategy for the company. By being able to do so, procurement data can be maximized, and a company’s value can increase better.
That is it for Procurement data! The article guides you on what procurement data is, how it affects the procurement process, and how there are two sources for procurement data: External and Internal. By knowing where the procurement process gathers its data more specifically, you can know the importance of properly utilizing the procurement data. This, in turn, can help optimize your procurement process and make it more efficient.
What is procurement data?
It is any information about the procured goods and services of the company.
What is External and Internal Procurement Data?
External Procurement Data is procurement data sourced from outside the company’s financial database, while Internal Procurement Data is procurement data sourced from within the company’s database.
Why is it important to know the difference between External and Internal Procurement Data?
By knowing the difference between the two-procurement data, a company can optimize their procurement data quality, and effectively enhance their procurement processing and strategy
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.