Given the high volatility of today’s global market, prices have been consistently fluctuating across all upstream and downstream supply chain processes. As a result, demand volume prediction with comprehensive ‘what-if’ analysis for price changes has become more important than ever for supply chain management.
What is Procurement Planning?
Procurement planning is the systematic process of identifying, assessing, and strategizing the acquisition of goods, services, or resources needed by an organization to meet its operational requirements and achieve its goals.
The Role of Modern Power BI Procurement Planning Solutions
A recent study shows that CPOs and Chief Supply Chain Officers are aware that a professional procurement performance management tool provides valuable insights into business strategy problems and supply chain issues. The more procurement departments are supported with all necessary information and analysis, the better they perform in their key task: to timely acquire goods and services to fulfil the company’s strategic objectives. Modern planning solutions come with process optimization and automation features that help free up time and reduce costs while allowing procurement managers to be better prepared for negotiations with suppliers.
Procurement PM as an essential part of xP&A, guided PPM workflow
Spend Analysis for Higher Cost Savings
Whereas CPOs define top-down saving targets, procurement analysts and finance teams monitor direct and indirect spend and saving initiatives they are in charge of.
Top-Down Spend/Savings Targets & Initiatives
Monitoring actual spending, savings, and suppliers is certainly important, but balancing supply & demand is crucial in S&OP and SCM as well. Combining Acterys AI-enhanced planning capabilities and smartPM’s PPM module, businesses can factor in external price forecast sources to simulate direct and indirect price and volume changes across several dimensions like category tree, product, material/cost driver, region, supplier, and many dimensions more.
Component prices (Actuals, Low/High, Forecasts) and forecast boundaries
Blending Sales Forecasts with Procurement Demand
With the right procurement planning tool, sales forecasts can be translated into procurement demand via the Bill of Materials (“BOM”). Expected demand from sales can be balanced with production capacity, allowing procurement managers to make accurate demand volume predictions. As an added bonus, Acterys provides integration wih online collaboration tools, like MS Teams, that facilitate seamless collaboration and task alignment for quick target achievement.
The solution fosters seamless collaboration among SCM, Procurement, and S&OP departments, leading to pro-competitive effects. It enables all internal and external experts/stakeholders to work on the same data, have common goals, and contribute as a team to achieve strategic objectives.
Thus, Finance, S&OP, SCM, Procurement, Production & HR are on the same page regarding target achievement and enterprise performance. All loose ends of typically scattered information can be connected in a truly integrated business planning framework (‘extended Planning & Analysis, xP&A’).
As a bonus, check out the first session of Acterys’ new xP&A Fireside Chat series. Martin Kratky has an insightful discussion with Alexander Hein from smartPM.solutions on integrated procurement planning and optimizing performance management processes:
About the PPM Solutions
This procurement performance management solution has been implemented by smartPM.solutions using the Acterys platform. Acterys provides write-back enabled and AI-enhanced planning capabilities in Power BI, enabling users to perform consolidation, reporting, and analytics with ease and speed. This PPM solution provides multidimensional spend analysis, price/volume forecasts with baked-in AI, risk monitoring, initiative tracking, contract analysis, savings forecast, and seamless integration into S&OP.
If you’d like to see how you can implement this solution to optimize procurement performance and build an integrated business planning framework, get in touch with our solution experts today. Or you can start a free trial here.
- Professional procurement performance management tools, such as Power BI, provide valuable insights into business strategy and supply chain issues. These tools come with optimization and automation features that improve procurement efficiency and preparation for supplier negotiations.
- Procurement departments set top-down saving targets, while analysts and finance teams monitor spending and saving initiatives. Monitoring actual spending, savings, and suppliers is vital for procurement success.
- Effective procurement planning tools can translate sales forecasts into procurement demand, considering factors like production capacity. This enables accurate demand volume predictions and better collaboration among teams.
- Integration with online collaboration tools like MS Teams enhances collaboration among Supply Chain Management (SCM), Procurement, and Sales & Operations Planning (S&OP) departments, leading to improved performance and pro-competitive effects.
- The solution creates an integrated business planning framework called ‘extended Planning & Analysis (xP&A)’ that aligns Finance, S&OP, SCM, Procurement, Production, and HR departments toward common goals and strategic objectives.
1. Why is demand volume prediction crucial in today’s volatile global market?
Demand volume prediction allows organizations to prepare for fluctuations in market prices. In a volatile market, prices can change rapidly, affecting the cost of goods and services. Accurate demand volume prediction, coupled with ‘what-if’ analysis for price changes, allows supply chain managers to make informed decisions, optimize inventory levels, and ensure the timely availability of goods, ultimately improving supply chain efficiency and cost-effectiveness.
2. What role do modern Power BI procurement planning solutions play in improving procurement performance?
Modern Power BI procurement planning solutions provide valuable insights into procurement processes and supply chain issues. They support CPOs and Chief Supply Chain Officers by offering comprehensive data analysis, process optimization, and automation features. These tools empower procurement departments with the information needed to acquire goods and services in a timely manner, aligning with the company’s strategic objectives.
3. What is the significance of monitoring top-down spend/savings targets and initiatives?
Procurement planning solutions aid organizations in achieving higher cost savings by enabling them to set and monitor top-down spend/savings targets. These solutions allow procurement analysts and finance teams to closely monitor both direct and indirect spending, ensuring that cost-saving initiatives are effectively executed.
4. What are the key benefits of blending sales forecasts with procurement demand?
Blending sales forecasts with procurement demand streamlines the procurement process by translating expected sales into actionable procurement requirements. This ensures that procurement aligns with actual demand, optimizing inventory levels and production capacity. Additionally, the integration of collaboration tools like MS Teams fosters efficient communication and task alignment among Supply Chain Management (SCM), Procurement, and Sales & Operations Planning (S&OP) departments. This collaborative approach accelerates target achievement, enhances cross-functional teamwork, and contributes to the overall success of procurement management.