Analytics in Procurement

With the new expansion, RIL Jamnagar Refinery’s capacity is increasing by 5.1 Mt summing to total
capacity of 41 Mt. This expansion will require a lot of decision making over a period of time. Using
sophisticated analytical methods, this process can be streamlined.

Over a past period of time it has been seen that there was a cost saving of 3-8% when analytics was used
in the field of procurement, compared to traditional pricing models. Analytics uncovered new insights
that can be used in in negotiations, vendor segmentation, performance management etc. The real
difference in performance of former sectors were revealed by sing analytics, thus helping in decision
making.

Benefits of analytics in Procurement

Today, sources for data have expanded to include a much more disparate set of both internal and external,
structured and unstructured data obtained in real time. Analytics brings about a new frontier with the
promise of transformative changes in procurement like:

• Self-Service Analytics and Reporting: It enables procurement to develop reports and perform
analysis on spend, supplier base, compliance, and other spend-related data.

• Slice-and-Dice Analysis: Analytical tool that presents data according to different criteria.
Procurement can examine spend information by supplier, geography and category.

Use of advanced analytics

1. Negotiation: It helps in preparing a fact base with information on previous purchases. Thus,
helping in knowing the factual rebuttal when vendor assert, “We are different”

2. Vendor management: While the personal nature of the relationship remains important,
conclusions about vendor performance should be based on data, rather than feelings. Analytics
helps in answering the questions like:

• Can we rank the vendor performance by evaluating quantitatively?

• Can we apply the evaluation methodology consistently to all the vendors?
• Analyze if the quotations submitted by vendors are as per requirement and identify the
opportunity cost of making a decision

Analytics in procurement thus helps in

• Extracting more value from the sourcing process

• Pinpointing changing customer demands.
• Getting the best quality products at the best possible price
• Obtaining both internal and external views on spend
• Tapping unstructured data