Blog December 8th, 2023 Better data quality through Procurement Analytics
Rubina Hatziparassidis
Rubina Hatziparassidis

In today's world of business, the efficiency and optimization of the procurement processes are of major importance for several reasons.

Cost efficiency through accurate data:
Accurate and high-quality data enables more accurate planning of procurement, which leads to cost savings. Poor data quality, on the other hand, can lead to wrong decisions and unnecessary spendings.

Improvement of supplier relationships:
Reliable data enables effective evaluation and selection of suppliers. Poor data can lead to wrong decisions, which negatively affects price development and delivery reliability.

Data-driven decisions give you a competitive head start:
Accurate and up-to-date data enables companies to react quickly to supply chain disruptions and market price developments. Poor data quality can lead to delayed or incorrect decisions, which reduces competitiveness.

Risk reduction :
High-quality data helps to minimize risks in the procurement process. Inaccurate or outdated data can lead to incorrect supplier selection, over-engineering of products or incorrect orders.

Overall, the quality of data in the procurement process is crucial for cost efficiency, risk management, quality assurance, sustainability and ultimately for the overall success of the company. Poor data quality, on the other hand, can have serious negative consequences.
In this article, we will take a closer look at how SCALUE® can help you to improve your data quality.

What is "bad data"?

There is no real definition here. However, when we talk to our customers about this topic, they regularly come up with the following four statements:

1. Non-standardized data:
Data that is contradictory or inconsistent, for example due to different spellings, formats or standards. This can make comparability and analysis more difficult.

One example from practice is incorrect delivery terms. Instead of DDP, many companies use "free house without/with packaging".


bad data through non standardized data in Procurement

2. Duplicate datasets:
Duplicates of data sets, regardless of whether they are supplier/article master data in one or more data sources, usually remain hidden. This can lead to confusion and errors.

An example based on practical experience would be a supplier with several supplier numbers within an ERP system. The following chart shows that although the supplier ADLER Real Estate has a procurement volume of € 2.6 million, this is not directly visible. This is because the supplier is listed both with supplier number 7080027 and 7080210. Around € 2,536,000 is charged under the first supplier number and around € 85,000 under the second.

SCALUE®'s clustering allows duplicate data sets to be created into clusters, so that the Procurement department has transparency and negotiating power over the entire procurement volume.


bad data through doublicate data in Procurement

3. Missing data:
The lack of information in a data set significantly reduces the quality of work and leads to incorrect decisions.

An example of this in practice is that the payment terms are not recorded. The following chart shows that the payment terms are not available for 10.7% of the procurement volume (n/a - not available).


bad data through missing data in Procurement

How does this happen?

The importance of data quality is often not sufficiently prioritized in many companies, even though there is recognition that it forms the basis for a healthy and transparent Procurement department. In practice, it often happens that too many people have the opportunity to create and change master data. This often leads to inconsistently created data records and further increases the lack of transparency in procurement. There is often a lack of the necessary time and resources, although there is a fundamental willingness to improve. In larger companies, departments are even set up to manage master data.

Results despite initial challenges

SCALUE® offers the possibility of continuous monitoring and improvement of data quality. With the SCALUE® solution, you can identify the loopholes at the touch of a button and correct many of them before the next data update. The risk is significantly reduced simply by limiting the number of persons with the authority to create master data. At the same time, our software progressively cleanses the data quality and saves our customers a significant amount of manual effort. The SCALUE® solution offers numerous options for improving data quality gradually and sustainably. Over a period of 6-12 months, our customers were thus able to free themselves from numerous manual tasks. One example of this is the mostly automated cleansing of supplier and article duplicates, which are also enriched with additional data.


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Continuous improvement of data quality

SCALUE® offers the possibility of continuous monitoring and improvement of data quality. With the SCALUE® solution, you can identify the weak points at the touch of a button and correct many points before the next data update. The risk is significantly reduced simply by restricting the persons with the authority to create master data. At the same time, our software gradually cleanses the data quality and saves our customers considerable manual effort. The SCALUE® solution offers numerous options for gradually and sustainably improving data quality. Over a period of 6-12 months, our customers were able to relieve themselves of numerous manual tasks. One example of this is the largely automated cleansing of supplier and article duplicates, which are also enriched with additional data.

We offer you a central data platform that provides a comprehensive view of your supplier relationships. Thanks to automatic validation methods, data errors are minimized so that you receive reliable information for your decision-making processes. Even with very poor data quality, potential for improvement is identified to increase data quality step by step, week by week. This enables you to gain in-depth insights and manage your suppliers effectively while continuously improving your data quality.

Conclusion:

Data quality is the key to well-founded procurement decisions. SCALUE® offers your company a solution that helps you to improve your data quality and increase efficiency in the procurement department. Our approach enables you to achieve better data quality and implement changes gradually and sustainably. Let's work together to optimize your procurement processes and achieve better data quality.

SCALUE®'s Procurement Analytics solution contributes significantly to increasing efficiency while helping to gradually improve the quality of your data.




How SCALUE can help you? Schedule a free demo now!


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