A modernized, digital infrastructure is the key to resilient supply chains. Thanks to new digital technologies such as cloud computing, the Internet of Things (IoT), artificial intelligence, and machine learning, companies can create more efficient, transparent, and resilient operations. Data-driven decisions reduce risk and increase supply chain resilience.
But having access to data that is incomplete or even incorrect is of little use. This can lead to wasted materials, poor purchasing practices, and unfortunate write-offs that impact a company’s annual costs. One of the first strategies for organizations should be to establish a single source of truth (SSOT). In other words, link all the data available in the enterprise. This source of truth provides a centralized and unified view of all existing data that employees can access. The more data available, the greater the likelihood of gaining relevant insights into the business and its processes through comprehensive analysis.
Data-driven sourcing facilitates collaboration and visibility between manufacturers and suppliers. By analyzing supplier data, you can assess supplier performance, financial stability, and potential risks such as transportation disruptions, natural disasters, or geopolitical events. This enables you to proactively manage risk, develop contingency plans, and ensure business continuity.
Share your and your suppliers’ data, including information from IoT devices, production data, forecasting data, product data, and more. For example, the RFP process can be streamlined by using AI models to help companies overcome data inconsistencies and discrepancies. By sharing relevant data and performance metrics, you can build stronger partnerships with your suppliers. This not only promotes better communication and mutual growth, but also leads to shorter delivery times, better product quality, and more innovation.
Data analytics can also help companies optimize inventory levels and lead times, reducing warehousing costs while ensuring that the right products are in stock when they are needed. By consolidating your material and component data into a single, trusted source of information, you can make your procurement processes more strategic and efficient.
Business teams that work closely together benefit from the ability to incorporate different perspectives and expertise. Cross-functional teams can work together to analyze data and develop innovative solutions. This approach allows companies to leverage the skills and knowledge of their employees and foster a culture of open communication and teamwork. The result: A more effective sourcing strategy and a culture of continuous improvement and innovation.
But even the best data is useless without skilled data analysts. This requires a combination of technical expertise, business sense, and creativity. Companies need to invest in training and developing their procurement teams to ensure they have the skills and knowledge to effectively use data in their decision-making processes. Many companies have started to build digital and data teams. Younger employees who are familiar with AI and ML data processes can make an important contribution to this process.
One aspect of data-driven decision making that should not be underestimated today is ESG (Environmental Social Governance). Data-driven sourcing strategies improve compliance with regulatory requirements and corporate policies. By monitoring and analyzing procurement data, companies can identify instances of non-compliance and take corrective action to minimize the associated risks. Or, by analyzing data, they can identify sustainable practices throughout the supply chain and develop ways to reduce their environmental impact. Data analytics can also help identify suppliers that use environmentally friendly production methods or are committed to reducing their carbon footprint.
Overall, data-driven procurement is transforming manufacturing operations by enabling companies to make data-driven decisions, optimize processes, mitigate risk, and build stronger supplier relationships. By leveraging data analytics, your company can also gain a competitive advantage in an increasingly complex and dynamic marketplace.
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