Procurement analytics

Procurement analytics is the use of data analysis and technology to optimise and improve procurement processes. These analytics involve collecting, analysing, and interpreting data related to the procurement of goods, services, and other contracts within construction projects. The goal is to enhance decision-making, reduce costs, manage risks, and increase efficiency throughout the procurement lifecycle. It is a powerful tool that leverages data to improve procurement efficiency, reduce costs, and manage risks. Its adoption is increasingly critical as the industry faces pressures to deliver projects on time, within budget, and to high-quality standards.

Procurement analytics might involve:

Data collection and management:

Information about suppliers, including their performance history, reliability, and pricing trends.
Data related to contracts, including terms, conditions, delivery timelines, and compliance.
Industry trends, market prices for materials, and availability of resources.
Specific data about construction projects, including timelines, budgets, and resource needs.

Cost analysis:

Comparing procurement costs against industry benchmarks to ensure competitive pricing.
Examining historical spending patterns to identify areas of overspending or inefficiency.
Using data to find cost-effective alternatives for materials or processes without compromising quality.

Analysing supplier performance based on factors like delivery timeliness, quality of materials, and adherence to contracts.
Identifying potential risks related to suppliers, such as financial instability or supply chain disruptions, using predictive analytics.

Contract management:

Ensuring that all parties involved in a contract meet their obligations, using data to monitor compliance.
Monitoring changes in contract terms and assessing their impact on project timelines and costs.

Supply chain optimisation:

Using data to optimise the ordering and storage of materials to avoid shortages or excess inventory.
Analysing transportation and delivery data to streamline logistics and reduce delays.
Predicting future material and service needs based on historical data and project timelines.

Analysing procurement practices to ensure they meet environmental and sustainability standards.
Ensuring that procurement activities comply with UK construction regulations and standards.

Utilising AI and machine learning to predict trends, automate routine tasks, and improve decision making.
Implementing blockchain for transparent and secure transactions, ensuring traceability in the supply chain.
Using cloud-based platforms for real-time data sharing and collaboration across teams and suppliers.

Reporting and visualisation

Creating real-time dashboards and detailed reports to visualise procurement performance, identify trends, and make data-driven decisions.
Tracking key performance indicators (kpis) related to procurement, such as cost savings, supplier performance, and project timelines.

Benefits of procurement analytics include:

By identifying inefficiencies and optimising procurement processes, companies can significantly reduce costs.
Data-driven insights help in anticipating and mitigating risks related to suppliers, contracts, and market fluctuations.
Access to accurate, real-time data allows for more informed and strategic decisions.
Improved data sharing and transparency can enhance collaboration between project stakeholders, including contractors, suppliers, and clients.

Difficulties with procurement analytics include:

Ensuring that the data collected is accurate, complete, and up-to-date.
Integrating procurement analytics tools with existing construction management systems.
Developing the necessary skills within the workforce to effectively use and interpret procurement analytics.