Did you know that poor data analytics costs the United States more than $3.1 trillion per year, and companies anywhere between $9.7 million and $14.2 million per annum?
Your supplier data is incredibly invaluable and embracing it may increase your business’ operating margins by up to 60% according to McKinsey.
Despite the clear business advantages, a Forrester report reveals that 73% of data goes to waste and is not relied upon for analytical purposes.
What does this mean for the company?
Supplier master data that could be used to make better decisions and drive costs low is left by the wayside in lieu of legacy outdated decision-making processes.
Instead, what businesses need to do is to not only collect and clean their data but start to analyze it so they can draw actionable insights to streamline operations.
However, before we get into the benefits of doing this, let’s go back to basics.
What is Supplier Master Data?
Lawinsider.com provides us with a definitive definition of supplier data:
“Supplier data is all of the seller’s supplier and vendor lists, records, telephone and fax numbers, email addresses and publications and marketing material relating to the purchase of goods or the provision of services to the seller in connection with the business.”
As can be imagined, for the average SMB, the supplier master database can be quite enormous. Hence the need to organize the data and create structure out of the colossal amounts of information being captured on a daily basis.
Learn more: What is supplier information management?
But in case you need further convincing of the necessity of studying your supplier master data, here are the top 5 reasons to motivate you to start finding meaning in your supplier data according to industry authorities.
5 Reasons You Need to Start Making Sense of Your Supplier Master Data
Is supplier data really that important? We present to you 5 reasons that affirm that it is.
1. Supplier Data Facilitates Better Enterprise Decision Making
Data is the new oil and the companies that manage to dive deep and extract as much as they can from their internal resources stand to gain a lot.
In a recent McKinsey report, it was revealed that those firms that were able to adapt their operations based on their data were 23 times more likely to secure customers than their competitors.
That’s not all, but they are also up to 6 times more likely to retain the aforementioned customers. There is a lot at stake if you ignore your supplier data and much to be gained if you make time to find the meaning behind it.
2. Data-Driven Businesses Acquire More Customers Than Their Competitors
What are some of the benefits of using supplier data in procurement? Well, according to research by BARC, the top advantages are as follows:
· Improved strategic decision making – 69% of respondents
· Better control and oversight of operational processes – 54% of respondents
· Improved customer relations – 52% of respondents
· Reduced process costs – 47% of respondents
Additional benefits that you can anticipate to enjoy once you’ve managed to analyze your data and make sense of how it can assist you to include:
· Increased sales
· Mitigated risk
· Quicker product innovation
· More efficient procurement operations
3. Lack of Supplier Data Engagement May Lead to Bankruptcy
Data is here to stay. This is an undisputed fact. According to a survey by Accenture, 79% of respondents were convinced that companies that shirked supplier data and big data were likely risking bankruptcy.
That’s not all but in the same study, more than half of businesses – 51% – affirmed that data was pivotal in their operations and would certainly revolutionize their future operations.
Another 39% agreed strongly with the sentiment that supplier data would change the way they do business significantly in the future.
4. Use of Supplier Data May Lead to Additional Revenue
Did someone say a 10% increase in data visibility could correspond to a $65 million boost in your current income?
Yes, this was disclosed in a Forrester report. It must be pointed out however that the report was mainly addressing Fortune 1000 businesses about the manifold benefits they could derive from well-executed campaigns using their data.
Richard Joyce, a senior data analyst, noted that at the moment, in most of these Fortune 1000 firms, only a mere 0.5% of data was being analyzed properly.
5. Businesses Using Data More Likely to Increase Operating Margins
The top priority for the majority of companies is increasing operating margins. In McKinsey’s Big Data study, they discovered that the enterprises that embraced data outperformed their competitors.
In fact, these companies stood to increase their potential operating margins by as much as 60%. You can no longer afford to ignore supplier data, big data, or any data generated by your business.
For retail organizations, profits can indeed be increased again by more than 60% if the companies commit to studying their data and attempting to find meaning therein.
Wrap Up
Taking time to organize and analyze your supplier data is worthwhile.
Your supplier data is a rich resource from which unique insight and perspectives to drive the business forward can be gleaned. When using tools such as ProcurePort’s suite of procurement solutions, improving your bottom line and vendor supplier relationship becomes a hassle-free affair.
If you would like to discuss how technology solutions can help you with supplier master data management don’t hesitate to reach out to one of our ProcurePort consultants.
Our solutions are trusted and used by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.
Contact us today.