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December 9, 2015

Why procurement is buying into the power of Big Data

Purchasing at the best price, at the optimum time, from the right supplier. Automatically. That, in a nutshell, is what is driving the wholesale embrace of Big Data by procurement professionals and organizations, according to Mathieu Neu, writing in French industry publication Decision-Achats.

Recently, the procurement game has changed significantly, with e-procurement tools getting better and better at automating strategic purchase decisions that result in significant spending cuts and budget optimization.

A few major players are leading this digitalization of the industry and Determine™ is poised to rewrite the rules in 2016, thanks to the upcoming release of an artificial intelligence solution that has been in development for the past two years.

“The objective is to reduce costs, but with the capability and flexibility to optimize purchase budgets during the year to make adjustments and seize opportunities when they arise,” states Bruno Charrat, Determine’s VP EMEA Operation and informatics engineer. “Our solutions are continuing to lead the charge.”

Is predictive purchasing next?

At the Salons Solutions forum in Paris on November 5, leading pundits from the procurement industry participated in an extensive program of idea sharing, technology solutions and best practices. There was a lot of discussion around new developments and new models for the industry.

Predictive analytics went from buzzword to “business as usual” incredibly fast, and its advantages are particularly suited to procurement. eProcurement solutions, like Determine’s, are all about leveraging historical, proprietary data. Through predictive purchasing, this data provides a solid basis for achieving significant control around purchase behavior.

“The challenge is always to make purchases at the best price, at the right time while minimizing supplier risk,” adds Mr. Charrat. “Our solution is far more robust in terms of accounting for price fluctuations.”

What sets Determine apart is using predictive abilities to advance or delay purchases over time. For instance, stacking orders to raise volumes will result in more advantageous negotiations, or benefiting from promotional offers while always optimizing the process.

Game changer: launching early 2016.

With the launch of Determine’s innovative new predictive analytics eProcurement solution, the whole approach to procurement is about to be turned on its head. The supplier and purchasing function will become much more flexible and fluid. Suppliers won’t necessarily be chosen based on contracts, but as the result of a scoring system that evaluates the pros and cons of offers on relevant products in the market at a given time.

“Supplier offers can be of interest, but maybe for a limited time that does not fit with procurement needs,” said Mr. Charrat. “Consequently, the number of suppliers a company will source from will likely be much higher than at present.”

Competition is always good for business. But Determine’s solution also aims to provide more accurate information to suppliers on how to buy — seasonally, changes in volumes, needs-based, etc.

By incorporating the advantages of Big Data and the muscle of predictive analytics, procurement professionals and organizations will be in a much better position to capitalize on the three “Vs”: Volume, Velocity, Variety.

Look for the beta version of Determine eProcurement early in 2016, with a launch version to be released mid-year.

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